Our Current Banking Crisis is a Replay of the S&L Scandal but on STEROIDS!

Here is the Chapter on the Savings and Loans from Rodney Stich’s book, DEFRAUDING AMERICA: 

HUD Mortgage Insurance Scam 
Another aspect of the HUD scams dealt with insurance premiums. People buying properties with mortgages provided by HUD paid mortgage insurance premiums up front for the life of the loan, amounting to several thousands dollars on each HUD transaction. Formerly, the buyer of HUD properties paid their insurance premiums on a monthly basis with their mortgage payments. But in 1983, the same Congress that passed legislation making the looting of savings and loans possible, passed legislation known as “HURRA” (Housing and Urban- Rural Recovery Act), pushed by Philip Winn, one of Denver’s high flyers, requiring the mortgage insurance premiums to be paid up front. 
CIA asset Gunther Russbacher described to me how this worked, as he saw when he headed Red Hill Savings and Loan. He said that this was another of the many CIA scams that defrauded the American people of many millions of dollars. It is probable that the CIA involvement in this scam is what kept the Justice Department from prosecuting those guilty of the mortgage premium insurance fraud. Russbacher described how the scram worked: 
They were using reinsurance companies with policy premiums that were never paid. Money was paid for the reinsurance but it was never paid [to the reinsurers]. The policy money, the premiums, were never paid in to where the policies were active. American International Groups was one of the big ones [involved in the scam]. Transatlantic Holdings was involved, as well as Transpacific Holdings. Maurice Greenberg, a close associate of Denver’s Leonard Millman, headed some of these companies. Dublin International Insurance was part of AI [American International]. We insured Putnam and Company. 
Upon close of escrow, the insurance premiums were to be sent to brokerage companies that would then order the mortgage insurance. Among the companies involved in these activities was the American International Group, headquartered in New York. AIG was at the head of hundreds of companies and trusts throughout the world, and reportedly headed by Maurice Greenberg, a close friend of Denver-based Leonard Millman. AIG owned other companies involved in these activities, including Transatlantic Holdings and Putnam Reinsurance, which are in the reinsurance business. 
The HUD mortgages for which up- front mortgage insurance premiums were paid were put into “pools” of mortgage loans with Government National Mortgage Association (GNMA), which are then sold off on the secondary market to investors. The up-front insurance premiums were reportedly never sent to the companies that were to provide the insurance protection. When there were large and unexpected numbers of foreclosures during the 1980s, the mortgage insurance did not exist to pay for the large losses. CHAPTER EIGHT 
Protected Insiders Looting Savings and Loans 
Congress and the Reagan Administration deregulated the savings and loan industry through the Garn-St Germain Act of 1982, which was signed into law by President Ronald Reagan on October 15, 1982. As he signed the far-reaching bill, Reagan announced that it was “the most important legislation for financial institutions in 50 years.” He added: “I think we’ve hit the jackpot.” If he meant the jackpot reference for the Mafia, the CIA, and a host of crooks, he was absolutely right. Even the famous bank robber, Willie Sutton, never envisioned such riches. 
I had considerable real estate at that time, including motels, hotels, truck stops, golf courses, apartments, and land, and knew the financial frauds that would follow deregulation. It didn’t take any great expertise to predict the consequences, and surely members of Congress and the industry recognized that fact even sooner than I. 
Developers, Mafia figures and crooks, started buying small savings and loans in out-of-the-way-places. In that manner they gained access to the Treasury of the United States, permitting them to engage in self- dealings, sham transactions, and massive fraud against the American taxpayer. Deregulation and the concurrent fraud were financially fabulous for many people, fueling massive growth in the real estate industry during the 1980s. The public picked up the price tab in the 1990s, and they would pay for decades, well into the next century. The losses, much of which was outright theft, exceeded the cost of World War II. Never in the history of the United States had such a massive financial debacle occurred, making the American taxpayer the victim of the biggest scam in the nation’s history. 
The crooks that held the controlling interests in savings and loan associations paid themselves extravagant salaries, with virtually unlimited expense accounts that bled their companies dry. They made loans to themselves or corporations they owned or controlled and had a fabulous lifestyle that couldn’t possibly be supported by the income of the savings and loans they acquired. 
Many sordid details of the savings and loan debacle have never been revealed by the mass media. Crooks, with the help of politicians, Justice Department officials and CIA renegades, stripped the American people of hundreds of billions of dollars. The American economy will eventually feel the effects of this theft, adversely affecting the American people. 
Warning Flags Presaging Deregulation 
It was no secret to members of Congress what would happen if the savings and loans were deregulated. The consequences of relaxing safeguards were seen elsewhere. For instance, the danger of brokered deposits was evident when serious problems arose in California during the 1960s when these deposits were allowed to reach a high percentage of a financial institution’s deposits, threatening its solvency. Sudden withdrawal of such large sums of money deposited as a block could easily make the institution insolvent. To correct this problem, regulators ordered a cap of five percent of an institution’s total brokered deposits. This restriction remained from 1963 until the limit on brokered deposits was removed in 1982 by the Depository Institutions Deregulation Committee, chaired by Treasury Secretary Donald Regan. This change was enormously profitable to financial institutions dealing in such deposits, including Regan’s prior employer before he joined the Reagan administration. 
Brokered deposits consisted of blocks of $100,000 deposits from individual depositors, which was the limit for federal insurance guarantees.98 By dealing in brokered deposits the banks were able to increase their capital and engage in huge fraudulent schemes. The danger arose from the high interest rates and fees needed to acquire them, and these costs were greater than what could be earned by lending the money for safe real estate investments. Just prior to voting for deregulating the savings and loans, the nation’s worst bank failure occurred, which was caused by eliminating safeguards and permitting brokered deposits. The Oklahoma City financial institution, Penn Square Bank, failed in 1982 and brought giant Continental Illinois National Bank and Trust Company in Chicago to the brink of failure, as well as other lending institutions that had placed large sums of money into Penn Square Bank. 
The American taxpayers had to bail out Continental Illinois to the tune of $4.5 billion (plus the interest that is still being paid on the payout). This amount was in addition to the payments made to the insured depositors at Penn Square. It was the largest federal bailout in the nation’s history, and showed the dangers of deregulation and brokered deposits and what could be expected with the subsequent signing of the deregulation act. 
Penn Square offered the deposit brokers higher interest rates and substantial brokerage commissions for funds placed with the financial institution, causing brokers to place millions of dollars into the bank on any given day. But the rates and the fees that Penn Square had to pay for these deposits required making loans on high-risk investments. Further, the continual losses due to high costs of the funds and the inadequacy of returns on these funds required a continuing infusion of money to continue the Ponzi-like scheme. 
Common sense and the history of failures made obvious what would happen when Congress voted for deregulation. But many of those who voted for deregulating the savings and loans were recipients of large financial contributions (i.e., bribes). 
With brokered deposits there was no money available to make normal home loans; the spread was too much between the rate that homeowners could pay and the rate the savings and loans had to pay for the brokered funds. 
The primary problem of deregulation came when the lending institution engaged in self-dealing, land-flips, sham loans, and many other devices used to carry out the massive fraud. All this was obvious to anyone close to the industry, as were members of Congress. But the immediate financial benefits to those voting for deregulation, the law firms and public relations firms, easily took precedence over the harm inflicted upon the United States and the American people, and this attitude prevails throughout these pages. 
Every Common-sense Warning Sign Ignored 
Some of the practices that could be expected to occur, and which did occur after deregulation, included: 
1. Inflating the value of properties through land flips, whereby a parcel of land was “resold” numerous times, sometimes on the same day. Each time the new “buyer” paid a higher price. In that way, a borrower could indicate the land was worth far more than it actually was and obtain a larger loan than the property was worth. Oftentimes no payments would be made on the loan after receiving the loan proceeds, and the property allowed to go into foreclosure. The borrower then walked away with the difference between the purchase price of the property and the loan proceeds. In many cases this constituted millions of dollars 
2. Making a loan to a controlled or a dummy corporation far beyond the value of the property, and then let the loan go into default, at which time it would be abandoned. 
3. Making a loan that was not intended to be repaid to a controlled corporation. Then when the loan and interest payments are due, make a larger loan on the property to “pay off” the prior loan and accumulated interest, thus showing a sham profit. The loan would be shown as a performing loan on the books rather than a loan in default. 
4. Swapping bad loans between cooperating financial institutions and showing the loans as performing loans on the books. 
5. Spending lavishly on aircraft, vacation homes, trips, and other expensive life styles and charging it to business expenses. An honestly operated business would not incur such charges when the business was operating in the red. 
6. Paying inordinately high salaries to themselves and providing themselves with bonuses when bad non- performing loans are renewed or traded for other bad loans with cooperating institutions. 
7. Making sham loans on greatly overvalued real estate owned or controlled by the lending institution, with borrowers never intending to repay the loans. 
8. Hiring former federal regulators at exorbitant salaries for their influence- peddling abilities and knowledge, to assist in circumventing regulatory protections. 
9. Paying many millions of dollars in bribes to members of Congress to block actions by federal regulators, and block corrective legislation. 
Typical Land Flip 
A typical example of the fraud associated with land flips was a tract of property northeast of Denver where the new Denver airport was supposed to be located. The original parcel of land, called the Little Buckeroo Ranch, was purchased for $1 million and then flipped over several times in dummy land sales, fraudulently showing its value as $5 million. The Denver group involved in this scam obtained a $5 million non-recourse loan on the property and then defaulted when it was discovered the airport would be built elsewhere. They made a $4 million profit on the deal. People involved in that one example were heavily involved in the HUD and savings and loan fraud in the Denver area and had close ties to the Central Intelligence Agency. 
Financing the Looting 
To generate the hundreds of millions of dollars to fund these scams, the parties operating savings and loans needed a steady supply of money, far more than could be expected from local depositors. The answer was in brokered deposits. Money brokers pooled $100,000 deposits from different sources and deposited the funds into whatever savings and loan offered the highest interest and paid the highest brokerage fee. 
The deposited funds would either be used for high-risk loans or, as was often the case, to fund sham transactions in which there was no intention to repay the loans. The loss of several hundred billion dollars that will be paid by the American taxpayer required more than simply poor judgment. There was no risk to the con artists, as the American taxpayers were insuring the money. 
Brokers would often offer deposits to a savings and loan on condition that the institution make one or more loans on a given piece of real estate. The loan amount would often be made in excess of the value of the property used for security, or made without any security. The institution making the loan may or may not realize that the loan would never be repaid. There were many variations of these scams. All could be foreseen, and all had occurred in isolated cases the decade before deregulation. 
The Expected Commenced Immediately 
The expected started happening immediately. Among the first was Vernon Savings and Loan in Texas, which failed in 1984, involving brokered deposits, land flips, inflated mortgages, and huge personal expenses billed to the financial institutions. Loans that would never have been made with the former safeguards were made to insiders and friends who scratched each other’s backs as they made themselves rich. 
Ed Gray was sworn in on May 1, 1983, to head the Federal Home Loan Bank Board (FHLBB), and promptly discovered the seriousness of the massive fraud. He tried correcting the problem by returning the restriction on brokered deposits to the previous five percent, thereby halting the primary problem. But those who used the brokered deposits descended upon Congress, handing out money insured by the American taxpayer and succeeding in blocking this change. Treasury Secretary Regan, whose former employer profited by the brokered deposits, and many others, sought to discredit Gray as some sort of wacko. 
Finally, the discrediting campaign succeeded, and Gray was replaced by Danny Wall, an aide to Senator Jake Garn, Chairman of the Senate Banking Committee. Wall then obstructed corrective action to keep the massive fraud scheme in operation, while simultaneously keeping the money flowing to members of Congress that kept federal investigators at bay. Wall protected Lincoln Savings and Loan from the San Francisco regulatory board that had planned to shut down the corruption- plagued institution, removing Lincoln from the jurisdiction of the regulators who had uncovered the corruption. 
In an unprecedented action, Wall transferred regulatory jurisdiction of Lincoln to Washington, and Lincoln continued its corrupt practices of looting assets of U.S. taxpayers and individual investors. One act was to offer bonds of bankrupted American Continental Corporation, Lincoln’s parent corporation, to its depositors, falsely claiming they were governmentprotected. Thousands of elderly people with no other source of income lost their life’s savings through this scheme, made possible by Washington and California politicians. These tactics also increased the immediate cost to the American taxpayer to approximately $2 billion plus the triple or so amount that will be paid in interest before the debt is paid off, if it ever is. 
Virtually everyone who played the game, who looked the other way, or who blocked corrective action, profited. Members of Congress, including the Keating-Five, received bribes for blocking corrective action by federal inspectors. The media received advertising dollars from large numbers of real estate developments built under a cloud of fraud. The crooks in the savings and loans and others acting with them profited. Everyone knew the American taxpayer would foot the bills. Another group of losers, given very little attention, were the stockholders. Many of them invested their life’s savings in the savings and loans, and these savings were usually lost. 
Simultaneously, Lincoln’s President, Charles Keating,99paid $839,000 of taxpayer’s money to various election committees to reelect Cranston,100 and hundreds of thousands more to the senators known as the “Keating Five:” Senators Alan Cranston, senior member on the House Banking Committee; Dennis DeConcini; John McCain; John Glenn; and Donald Riegle. I had notified each of them of the criminal activities I had uncovered, and demanded they receive testimony and evidence that my CIA and DEA whistleblowers and I were ready to present. They refused to respond. 
Members of Congress sought to continue the cover-up to the end. In June 1989 Congress quietly rejected a request for $36.8 million to hire investigators to accelerate the investigation and prosecution of corrupt savings and loan officials. 
Significant amounts of the looted funds were given to members of Congress as political contributions or under the table, like paying off the cops to operate a criminal enterprise. 
In 1986 the Keating-Five senators applied pressure upon Washington regulators to prevent government investigators from taking actions against Keating’s Lincoln Savings and Loan (after the group received huge financial donations from Keating). This Congressional obstruction of the regulatory function of the U.S. government increased the costs to taxpayers far in excess of two hundred billion dollars for the entire industry. The taxpayers also must pay for the bribes paid to politicians on the California and federal levels and to the former government officials who became high salaried employees of Lincoln. 
California’s Senator Alan Cranston obstructed the actions of the regulators who sought to prevent others from losing money, including elderly and retired people who invested in the uninsured bonds issued by Keating’s enterprises. This obstructive action interrupted the regulatory process, delaying the government takeover of Lincoln Savings and Loan, as it continued selling worthless, uninsured securities to the public. 
Even Alan Greenspan, then a private consultant and later chairman of the Federal Reserve Board, sent a letter seeking to block corrective actions, falsely claiming Lincoln was in good financial shape and had good lending practices. This was preposterous. Lincoln’s primary assets were grossly inflated desert land. Lincoln had a practice of lending money to closely related investors or their own real estate enterprises, often without any credit check and without collateral. 
Eventually the losses were too great to ignore. A new agency was formed to clean up the mess. But the same parties who blocked prior corrective action wanted Wall installed as its head, fighting to retain the head of the regulatory agency that helped continue the escalating corruption. Senator Cranston and Representative Donald Riegle fought hard to have Danny Wall confirmed as head of the new agency without a confirmation hearing, avoiding senate questioning of the debacle that unfolded while he held responsibility to prevent such fraud. 
Congress’ response to the nation’s greatest financial debacle consisted of carefully avoiding charging any of their members, including the Keating- Five, with any crimes. They wrung their hands trying to decide whether any of the senators who received huge amounts of money from the crooks, and who blocked corrective attempts by federal regulators, violated ethics. Using this standard on many people sent to federal prison for far less federal offenses would greatly reduce the prison population. 
You Rat on Me and I’ll Rat on You 
Cranston had earlier warned the entire United States Senate that, if the Ethics Committee moved to censure him for his role in the savings and loan scandal, he would blow the whistle on the role played by other senators in the savings and loan matter. As the “investigating” committee considered whether to censor Cranston for ethics violations, Senator Jeff Bingaman disqualified himself, requiring appointment of another senator, which in turn required weeks for the replacement to review the evidence. Bingaman had disqualified himself after “suddenly” discovering, after three years, that a conflict of interest existed: his wife worked for a law firm that once represented two of Cranston’s staff members whose legal bill had not been paid. 
That move took the heat off the ethics committee until media attention focused elsewhere. 
Congress repeatedly refused to provide money to shut down the hemorrhaging savings and loans, which then permitted the looting to go on, as well as continuing the political contributions from the insolvent institutions. Congressman Gonzalez stated101 that the White House and federal officials could simply have placed the looted and failed “institutions under government conservatorship.” But Congressman Gonzalez complained to federal regulators in late 1992 that “Regulators can put failing institutions under government conservatorship now, with or without any new funding. This should save the taxpayers the costs of further depletion of the institutions’ assets.” The refusal to shut down the fraud-racked savings and loans escalated the losses. 
Usual Cover-Ups 
Investigators, trying to blow the whistle on rampant corruption, testified to the House Banking Committee in October 1989 that Washington officials repeatedly overruled or restricted their investigation of corruption-riddled Lincoln Savings and Loan (as they had done after I started exposing hardcore government corruption in the aviation field starting in the mid-1960s). 
Admitting to Paying for Influence 
Keating admitted giving over five million dollars in political contributions to influence members of the U.S. House and the Senate and state politicians in California and Arizona. Cranston and the four other senators pressured regulators to back off from shutting down Lincoln Savings and Loan, inflicting even greater losses upon the American taxpayer. 
Keating wasn’t hesitant about stating the effects he expected when he paid bribes to members of Congress, stating several times to the press: One question, among many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause. I want to say in the most forceful way I can; I certainly hope so. 
Despite the huge losses incurred by these practices, Keating paid himself and his family over $34 million in the three years before its demise, even though losses during this time were destroying the corporation. Representative Henry Gonzalez of Texas initially protected the system by using his post as chairman of the House Banking Committee to obstruct an investigation into questionable banking practices in his home district. 
Gonzalez pushed an amendment to protect First National Bank of San Antonio and other financial subsidiaries from the regulatory actions of the Federal Deposit Insurance Corporation. But as the savings and loan scandal shot out from under the media blackout Gonzalez, head of the House committee103with oversight responsibilities for the savings and loan industry under the Office of Thrift Supervision (OTS),104 focused attention on the savings and loan problems. 
“Honesty Doesn’t Pay.” 
The Dallas Morning News reported a conversation by an anonymous Texas state legislator, who said he had to take bribes from the HUD and savings and loan crowd because he needed the money to maintain his life style on a legislator’s salary. He reportedly stated: “It’s hard to be pious because in all honesty I could use the money. Honesty doesn’t pay.” 
My CIA contacts described a well- publicized area of the savings and loan corruption in Dallas apartment units along Interstate 30, running east to Lake Ray Hubbard. Hundreds of apartments were built for which there was no demand, no rentals, and no sales. Money was made through land flips and shoddy construction. Some apartment buildings were shown as completed even though the plumbing and other necessities had not been installed. Covert CIA proprietary operations were involved in this scheme that defrauded the American public. 
California Involvement in Corruption 
Corrupt California politics made the Lincoln debacle possible. The California General Services Department (and the California Department of Savings and Loans) obstructed the investigation of Lincoln’s corrupt practices, rendering administrative decisions resulting in the loss of almost a quarter billion dollars in savings of the elderly. 
In California, Chapter 11 judicial corruption was especially acute. California was the state producing numerous lawyers and prosecutors that played a key role in some of the scandals described within these pages. The Justice Department‘s scheme to silence me used California lawyers, law firms, and state judges, augmented by California-based U.S. district court judges and justices. In this way they joined the conspiracy of criminality I sought to expose. 
Many on the Reagan-Bush team were from California, including Earl Brian (of Inslaw fame), Edwin Meese (the U.S. Attorney involved in many of the scandals described within these pages), J. Lowell Jensen (part of the Inslaw scandal yet to be described), and Senator Alan Cranston. 
Numerous California officials and friends of California Governor George Deukmejian, mostly lawyers, were heavily involved in these scandals. A Keating enterprise, TCS, made political contributions totaling $48,000 to Deukmejian’s campaigns. Keating paid over $189,000 to Deukmejian, in addition to the nearly one million given to California Senator Cranston‘s interests. Over 23,000 California investors were seriously harmed, as they purchased $250 million in uninsured bonds (most investors thought they were government insured) after California regulators approved their sales, knowing the corporation was insolvent. Many of these elderly people lost their life savings and their sole means of financial support. 
In November 1984 Lawrence Taggart, while a California Savings and Loan Commissioner, rendered official decisions allowing Lincoln to continue its fraudulent schemes, causing thousands of investors to lose their life savings. On December 7, 1984, three days before a crucial deadline that nobody was supposed to know about except highest-level federal regulators, Taggart gave Lincoln approval to move almost a billion dollars to its subsidiaries. 
Taggart then left to became a director of TCS. But records showed Taggart was already hired by TCS at that time. On January 1, 1985, Taggart left his California position, responsible for regulating savings and loans, to work full-time as TCS’s highest salaried executive. Additionally, he was to receive half of the after-tax profits earned by the consulting department he headed, and other perks. Three weeks later, Lincoln bought $2.89 million worth of TCS common stock. 
Barbara Thomas, a former SEC commissioner, reportedly called the SEC to act as a character witness for Keating during its investigation. Gonzalez said his staff’s investigation revealed that Ms. Thomas had received a $250,000 loan from Mr. Keating with unusual payback provisions, suggesting a quid pro quo arrangement. 
Jack Atchison of the auditing firm of Arthur Young & Company was primarily responsible for auditing Lincoln Savings and Loan and submitting the reports to the government. Atchison sent several letters to three senators saying that Lincoln was a sound institution and that federal regulators were harassing Lincoln executives. Atchison then left his employment with the accounting firm and went to work for Lincoln at a salary exceeding $900,000 a year. The salary far exceeded what the position justified. It was surely another of hundreds of quid pro quo agreements in exchange for the sham report showing Lincoln as being solvent and in good financial condition, when actually it was not. 
A California Department of Corporations lawyer-regulator issued a strong warning about uninsured bonds sold in Lincoln’s offices. But California officials kept the warning quiet, making possible the sale of worthless bonds to thousands of California investors. 
California Assemblyman Patrick Nolan received large financial contributions from Keating after Nolan sponsored legislation removing investment restrictions on state-chartered institutions. More dirty California politics followed. In 1983 I notified Governor Deukmejian, California Attorney General Van De Camp, and numerous state legislators, of the involvement of state judges in seeking to silence my exposure of criminal activities. Instead of investigating the charges and taking corrective action, they protected the judges after I filed civil rights actions in federal court. 
California officials denied state examiners and legislative investigators access to records, stating there was high danger of asbestos contamination where the records were stored. Possibly twenty years residence in the building might constitute a danger, but certainly not ten minutes to pick up the files! The building owner denied there was any danger:107 “They [the records] could have been picked up any time in the last 200 days. They knew there was no problem [of asbestos].” 
Assemblywoman Delaine Eastin of the California House Banking Committee stated that subpoenas would be necessary in the Lincoln case to obtain the records from the California Department of Corporations and the California Department of Savings and Loans. Officials under Governor Deukmejian refused to turn over the records, knowing that they contained evidence of California politicians’ involvement in the savings and loan scandal. California and Arizona committees conducted interim hearings dealing mostly in trivia, in that way protecting California officials implicated in the savings and loan scandal. 
Both U.S. senators from California, Alan Cranston and Pete Wilson, received money from Keating to block the actions by federal regulators. Wilson received over $75,000 from Keating and received large financial contributions within two months of his election to the U.S. Senate, holding the record for the amount of political contributions in 1990, according to the San Francisco Chronicle and San Francisco Examiner. 
Part of the money, often the life’s savings and means of economic survival, lost by investors, went to bribe U.S. senators and representatives who were protecting the crooks in the savings and loans. Widows, retired persons, many of them elderly, testified before a House Banking Committee on November 14, 1989, that they lost their entire life’s savings, blaming California Senator Alan Cranston and other members of Congress for their losses. Many, unaware they were uninsured, invested their life’s savings in the over $300 million in junk bonds after Cranston and other members of Congress blocked the actions of government inspectors and regulators. What should have been golden years for thousands of retirees, especially in California, turned into abject poverty, compliments of California regulators and members of Congress, who took bribes to prevent exposure and closure of the corrupt practices of Lincoln Savings and Loan, Keating, and others. 
A Few Exceptions 
There were a few members of Congress who spoke out on the rampant criminality in the deregulated savings and loan scandal. Representative Jim Leach told a panel of journalists (May 1989), “You have the opportunity to hold your Legislative Branch accountable, and perhaps bring it down.” Referring to the cover-up by the government regulatory agency that permitted the corruption to continue, Leach stated: “This Bank Board did the opposite of making timely warnings. It tried to put people to sleep while a fire was raging.” 
Lawyer Joseph Cotchett of Burlingame, California, representing many of the elderly who were swindled in the Lincoln bonds, described the obstructionist tactics by California officials: “And now we have reached the 1,000th coincidence in this case.” 
Can the Money be Recovered? 
Federal Deposit Insurance Corporation‘s Chairman L. William Seidman told of the hopelessness of recovering the huge losses. He warned that the amount of money recovered from anyone found guilty of self-dealing and other insider abuses would be small. “The money is long gone, spent,” Mr. Seidman said. “We cannot expect any substantial recovery from criminal abuse.” 
But it could be traced if they wanted to, as I found through CIA and other sources where many of the trusts were located. Whatever the actual immediate figure is, $250 to $500 billion, these figures exceed many times the total amount looted from publicized savings and loans. My CIA and other contacts, who had key roles in the HUD and savings and loan scandals and some yet to be exposed, helped move the money to secret offshore and domestic banks, trusts, limited partnerships and other financial vehicles. They told me where some of the funds could be located. In later pages, some of these locations are identified. 
Heavy CIA Involvement 
Several well-documented books108 have been written of the savings and loan debacle. One thing that most of them missed, which I would not have known except for becoming a confidant to several CIA operatives, was the major role played by the CIA in the looting of America’s financial institutions. Among the CIA-related savings and loans listed in these books as being part of the looting but not identified as CIA proprietaries were Silverado Bank Savings & Loan (Denver); Aurora Bank (Denver); Indian Springs State Bank (Kansas City, Mo); Red Hill Savings and Loan; and Hill Financial in Red Hill, Pennsylvania. These authors also failed to discover that many of the other savings and loans were often cutouts for the CIA. 
Silverado Bank Savings and Loan 
Much has been written about Denver’s Silverado Bank Savings & Loan and its most prominent director, Neil Bush, the son of George Bush. But much has remained secret about Silverado. One of the best-kept secrets was that Silverado was a covert CIA operation; that it funded many covert CIA assets; and that many of the huge financial losses were the direct result of CIA activities. It is ironical that Silverado, a CIA proprietary, had as one of its directors the son of former director of the CIA, George Bush. Because of heavy CIA involvement in Silverado, and for other reasons to be covered, Justice Department prosecutors protected the Silverado gang against meaningful prosecution. 
Neil Bush played a key role in Silverado’s misconduct, receiving only a token reaction from government agencies that kept a lid on Silverado’s criminal activities. Interest payments on money borrowed by the United States to pay off the original $2 billion looted from Silverado may cause the cost to the taxpayer to exceed $6 billion, assuming these debts are ever paid off. It required over two hundred sham loans of one million dollars each, not repaid, for these losses to occur. Neil Bush, like Oliver North in the Contra affair, displayed a look of innocence when questioned about his role in this huge financial fraud. 
Neil Bush, while in a position of trust on the board of directors, borrowed over $2 million from Silverado, part of which went into a dry hole drilling for oil in an unlikely location. Most of the money went for his salary and personal expenses. He was not so stupid as not to realize the money would never be repaid if that hole did not produce oil. He drilled this hole where it was known there was no oil. But the drilling served as justification for paying himself a large salary and lots of perks, which the everbenevolent American taxpayers now must pay well into the next century. 
Bush made no payments on the money he borrowed and no charges were filed by the Justice Department beholden to his father, President George Bush. It paid to have Justice Department personnel in your back pocket. Two borrowers from Silverado who were partners with Neil Bush, Ken Good and Bill Walters, got away with $130 million in loans from Silverado that were never repaid. Some of this money went to Michael Norton, who later protected them from prosecution when Norton became U.S. Attorney. The Mafia never had it so good. 
When the lending institution failed, the taxpayers were stuck with the tab plus associated costs, including interest on the money borrowed to finance this portion of the national debt. The borrowers in the sham transaction, who had good political connections, often purchased the property at pennies on the dollar from the government after the savings and loans were taken over. Before the taxpayer finishes paying, the cost will probably triple. The infamous Silverado Bank Savings & Loan in Denver was one of the key lending institutions involved in these types of scams. 
Media Cover-Up 
Investigative reporters for the establishment media in the United States knew for years about the financial debacle, but kept the lid on the scandal. To remove the lid would have financially affected them, as major advertisers would have eliminated their advertisements. In Denver, for example, three newspapers received considerable income from the advertisements of the group heavily involved in the HUD and savings and loan fraud: Rocky Mountain News; Denver Post, and Westword. 
Taxpayers’ Bill: Over $200 Billion—and They Never Complained! 
The greatest financial debacle ever inflicted in the history of civilization is causing American taxpayers to be saddled with a debt that has been estimated as high as 200 billion dollars, including interest, an amount far exceeding America’s cost of fighting World War II. Probably this large indebtedness will never be paid off. And this is only the savings and loan fraud. Many other corrupt financial scams are pulled on the American public, including HUD, Chapter 11, and others yet to be described. This fraud, and the missing money which no one has sought, requires the American people to pay huge tax increases, and threatens the continuation of basic social programs. Very little attention has been given to the losses suffered by those people who owned stock in the savings and loans, including the retired people who had their entire savings in worthless stocks that no longer provided dividend income. 
Where Were the FBI, Justice Department and Other Federal Checks and Balances? 
A good question would be: Where were the hundreds of FBI and Justice Department investigators during this massive fraud inflicted upon the American people? The criminal activities were too extensive for them not to know of their existence. With its many connections within the United States, one could also ask where the CIA was during all this? The fact is, they did know. Later pages will help to explain how these criminal enterprises are linked together, and how people in control of our checks and balances were implicated in them. 
A California banking investigator, Richard Newsom, testified that he went to the FBI in July 1988, after he found evidence of serious criminal activities in the savings and loan industry. He testified that he had found that the parent company of Lincoln Savings and Loan funneled over $800,000 to Senator Alan Cranston, and that “the stuff was too hot.” The FBI and Department of Justice refused to take any action on the reported corruption. As is shown throughout these pages, the Justice Department‘s lawyers, including their FBI Division, are most noted among insiders as being heavily involved in hard-core obstruction of justice when federal officials are implicated. 
Justice Department Protection of Kingpins And Wrist Slapping of Their Underlings 
James Metz, listed as a majority owner of Silverado Savings & Loan, pled guilty (October 16, 1992) to taking $100,000 of savings and loan funds for personal use, and received a six- month sentence in a half-way house. This sentence permitted him to work as president of Richmond Homes and be home during the day, requiring only that he sleep at the location at Colfax and Fillmore Streets in Denver. This token judgment ignored the two billion dollars looted with his help from Silverado. My CIA contacts stated Metz was one of many CIA assets in the Denver area. 
David Mandarich was indicted for illegal contributions, of which Michael Norton, U.S. Attorney in Denver, was the major recipient. Since Norton was the primary recipient of the money, he had to stand aside and have Marvin Collins, U.S. Attorney from Texas, act as special prosecutor (directed by Norton) to prosecute the case. Mandarich took the fall for the many other big names but was protected by U.S. Attorney Collins, who deliberately presented a weak case to the jury. U.S. District Judge Richard Matsch then assisted in the cover-up by dismissing the charges. 
Justice Department prosecutors waited until the statute of limitations had run out for charging Neil Bush and others of the Denver gang before filing nominal charges against Silverado’s James Metz and Michael Wise. Corruption and cover-up in the Denver area was orchestrated by U.S. Attorney Michael Norton and Assistant U.S. Attorney Gregory Graff in Denver. Investigation of key players would have implicated the CIA and risked exposing White House and other politicians involved in the savings and loan crimes (among others yet to be described). 
Coming Down Hard on Scapegoats 
Many of those charged and prosecuted by Justice Department lawyers in the savings and loan fraud were outside directors of savings and loans, in honorary positions with no knowledge of or control in the institution’s activities. By seeking to put these people in prison, Justice Department prosecutors were protecting the kingpins that continued to inflict great financial harm upon the American public. By indicting these people, the prosecutors misled the public into thinking that justice was being done. 
The Fraud Didn’t Stop 
The fraud by the Denver group inflicted billions of dollars in direct losses upon the American people. But it didn’t end there. The same Denver group and others, who brought about the collapse of the savings and loan industry by their corrupt activities, used their Washington influence to buy back properties and other assets from Resolution Trust Corporation at ten and twenty cents on the dollar. They made money bringing down the savings and loans and made money buying the assets back, with the help of the same Washington gang. MDC bought from the RTC $750 million in loans that they had obtained from Silverado for $150 million, making a $600 million profit, and defrauding Silverado out of $600 million. This was not mentioned in the investigation of that savings and loan. 
Central Intelligence Agency Involvement 
An article in Penthouse109 detailed the CIA involvement in fleecing financial institutions. Entitled: The Banks and the CIA, Cash and Carry, it carried the subtitle, “How Agency rogues fleeced financial institutions to help create one of the greatest scandals in U.S. History.” The article, describing the looting of banks and savings and loans by companies fronting for the Central Intelligence Agency, stated in part: 
Agency rogues fleeced financial institutions to help create one of the greatest scandals in U.S. history...free-lance C.I.A. operatives—in the course of carrying out covert operations, fleeced America’s financial institutions.... 
The C.I.A., it was claimed, sanctioned...pulling money out of federally insured financial institutions to fund covert activities, particularly arms deals. 
The article went on to say how Congress had shut off funding needed by the CIA for its covert operations, and how the CIA underground smuggled drugs into the country and looted banks and savings and loans. It further described how the CIA covert operations went underground when President Jimmy Carter ordered disbanding of its covert operations in the late 1970s. The article described how President Reagan’s 1981 inauguration reinvigorated the covert CIA operations. Denied funds by Congress, the covert CIA network carried out unlawful and clandestine activities throughout the United States and overseas. These activities violated the CIA charter and were criminal acts. 
The Houston Post started a series of articles in 1991 revealing connections between the CIA, organized crime, and the savings and loan scandal. Investigative reporter Pete Brewton left the Houston Post after pressure was put upon him to withhold key facts. In October 1992 his book was published: The Mafia, the CIA, and George Bush–The Untold Story of America’s Greatest Financial Debacle. 
My investigative activities brought me into contact with deep-cover intelligence agency personnel who revealed to me the part played by the CIA in looting the savings and loans and other financial institutions. In the following pages this relationship is explored. 
Secret Crimes by the CIA Against America 
As described in detail in subsequent pages, commencing in 1990 I became a confidant to many former deep- cover CIA and DEA personnel. One of these was Gunther Russbacher, whose father was a former German intelligence officer during World War II. Russbacher held many sensitive positions within the covert segment of the Central Intelligence Agency and was involved in deep cover operations. More is said about Russbacher in later pages, but reference is made to him and some of the CIA activities that he related to me in detail over an eight- year period. 
Russbacher‘s key covert position within the CIA took him far beyond the limited knowledge many CIA personnel have of CIA operations. The Agency tries to limit knowledge of overall operations by compartmentalizing operations and limiting the knowledge that any one participant has of the overall game plan. But Russbacher’s high position within the Agency made him privy to a vast number of secret CIA operations. 
Russbacher revealed to me the role played by the CIA in the savings and loan and HUD scandals. He had been with the CIA for over two decades and had been trained by the CIA to operate covert financial operations under various CIA programs, including Operation Cyclops. As he developed knowledge and expertise, the CIA had him organize other CIA proprietary financial institutions. 
Russbacher and other deep-cover sources gave me innermost secrets of how the CIA looted America’s financial institutions, how the money was laundered, the criminal elements with whom the CIA acted, and where some of the money ended up. These CIA operatives stated how the operations worked and the names of some of the covert CIA financial institutions, fronts, and cutouts. They gave me blank checks, letterheads, copies of corporate filings, and other writings supporting these statements. 
During the past eight years I conducted thousands of hours of questioning with Russbacher and other CIA and insider contacts, receiving details of the most secret CIA operations in which they participated during the last three decades. I received sworn statements, documents, before the publication of this book. I checked their credibility with other CIA sources. Most, if not all of what Russbacher and others stated, and what is included in these pages, I believe to be true. 
Some banks and savings and loans became fronts for CIA covert operations and often made phony loans, phony appraisals, and phony sales, generating enormous sums of money for clandestine CIA activities. 
Russbacher told me that the CIA had given him many aliases during his years of deep-cover activities. He said that during the first two years of his affiliation he was a contract employee of the CIA. Then, in 1965 he entered the United States Navy and was assigned to the Office of Naval Intelligence ( ONI). During all but three years of his CIA affiliation, he was in Covert Operations, Consular Operations, and other branches of covert government service. He did two tours of duty in Vietnam and Laos and was an unofficial prisoner during the second tour of duty in Southeast Asia. The U.S. government didn’t list its covert personnel who were prisoners of war.110 In a December 6, 1992 sworn declaration, Russbacher described to me part of the CIA operations in which he was involved: 
It is my intent to clarify, once and for all, how the Intelligence Services of the United States of America, have used the savings and loan (Thrift Institutions) to fund their respective covert operations, both within the United States, and abroad. The scheme creating an unlimited money supply was devised after the inside knowledge of how the Federal Reserve operated became known to operatives and case officers. A monetary growth medium had to be found which would enable the Agency (CIA) to have access to an unlimited supply of funds with which covert operations might be funded. The key was...”How to utilize/ capitalize on the Federal Credit Programs.” Careful analysis and study of the Federal Credit Act provided the proper forum. 
It was decided that small to medium businesses of the Proprietary Operations Unit would be well on line to provide these expert services. Soon, various businesses, owned and operated by either the Agency or utilizing a front directorship, began to deposit funds (legal tender and bogus bearer bonds) into the selected Thrifts. The loading of these institutions was always accomplished with the help of inside information, gained and acquired by and through information garnered by the FSLIC and their respective service members. 
It was decided that various front organizations would deposit millions of dollars into these selected thrifts, and that such deposits would permit the depositors to make collateral loans for eight-five percent (85%) of the deposit value. The disparity of deposit and secured loan was the carrot for the ailing financial institution. The Agency, through its Proprietary Operations Division, was quick to recognize the Fed. 
Lending to Deposit Rate for Thrifts, which in turn stated that every dollar taken in on deposit would permit the Thrift to borrow up to seven dollars from the Federal Reserve. It was a lucrative enticement to Agency Operations. The loaned funds were soon gathered from all regional affiliates, and channeled to fund the Charters for our own Thrift institutions. The stage was set. It was merely a question of time until we began re-investing our portfolio. 
110 His military numbers included 54 329 963; and his various Social Security numbers included 440-40-1417, 471-50-1578, 441-44-1417, and 447-42-0007. 
Over a period of approximately 3 years, more than 35 federally insured “Agency Thrifts” were brought on line. Each of the financial institutions was funded in part by Certificates of Deposit (from our own front companies), and various other instruments of financial obligation. Sometimes, bogus (duplicate) Bearer Bonds were used to insure sufficient start-up capital. Slowly, these institutions began making large loans to other Agency front businesses. Many of them flourished regardless of the initial intent to strip them systematically of their assets. Those which failed to provide an unending “money funnel” were soon brought to Court, pursuant to Chapter 11, of the United States Bankruptcy Laws. Prior to permitting entry into such proceedings all visual assets were stripped and/or removed from the insolvent companies. 
The United States Bankruptcy Courts, as well as the assigned United States Trustees, would permit us to re-channel the obvious assets prior to satisfying the demands of the legal creditors. It must be stated that in the initial stages of such operations there were no legal creditors as the entire operation was an “in- house operation,” and subsequently not issues or obligations traded on the open market. Such practices were soon discarded as the volume of the operation was not able to keep out private and corporate investors. Many of the removed assets were sold to other agency operations, which in turn sold said assets to other linked dealers. 
Brokerage companies of dubious repute were soon spin-offs of the mega industry. In order to provide continuity as well as expert disclosure, I shall reference the history of the funding of Hill Financial, as well as Red Hill Savings and Loan; the establishment of the National Brokerage Companies; the creation of National Financial Services Corporation; National Leasing Corporation; National Realty Corporation; Crystal Shores Development Corporation; Crystal Shores Financial Corporation, and Clayton Financial Planning Corporation. It is imperative that the continuity and creation are uninterruptDedu. r ing my time of service within the Proprietary Operations Division of the Central Intelligence Agency, I was approached while using the assigned name of Robert Andrew Walker to initiate contact with a nationally prominent brokerage house. (It must be noted that I had been a part of such brokerage facility under another alias/code name.) I followed the order and began a transfer study, which in turn was to initiate and facilitate the founding of a new savings and loan facility in Red Hill, Pennsylvania. All transfer studies were accurate and the new S&L was soon brought on line. It was funded with corporate paper, other private and corporate bonds/certificates, and other financial obligations. 
The founding fathers of Hill Financial were Donald Lutz and Robert A. Walker, a/k/a/ Gunther Karl Russbacher. The financial package of the S&L was born from funds derived from SBF Corporation. The new S&L flourished, making numerous loans to the economically depressed local and regional area. These notes were in part nonsecured, and no payoff was anticipated from these local trades. We began to diversify, using the Federal Credit Act to gain and secure additional federal funds, by securing other deposits from Agency Operations. Our deposit portfolio was extended on a ratio of 4.3 to 1 and thereby provided considerable additional loan coverage to other more open and more lucrative markets. We began to explore bringing on line additional feeder organizations which could/would add to our real deposit base. 
The decision for such action was taken after I received orders to charter a brokerage company in the state of Missouri. We, the directors of Red Hill S&L held a closed meeting, wherein it was decided that I would become Chairman of the Board, and elevating Donald Lutz to the presidency. Pledging my continued assistance, I was permitted, nay ordered, to set up shop in St. Louis, Missouri, where I dropped the name Robert A. Walker, and became Emery J. Peden. 
Within three months I was a registered broker of the Prudential Insurance Company of America. Soon after learning the business, I resigned my position and began a long-term relationship with Connecticut Mutual Life Insurance Company. I had an office in Clayton, Missouri, and soon made a significant impact on the financial and insurance industry. 
END OF SEGMENT ONE (1) of the deposition of Gunther K. Russbacher. I do certify the information contained in this segment of my deposition to be true and correct. Such certification is given under the penalty of perjury. Further, affiant/deponent sayeth not. Gunther Karl Russbacher, deponent in cause. Dated: December 6, 1992. 
Russbacher incorporated and operated a number of covert CIA proprietaries in the United States from the late 1970s to 1986. His main headquarters was in Missouri, but his CIA proprietaries had offices throughout the United States, with heavy involvement in Dallas and Denver, where much of the HUD and savings and loan looting took place. 
Russbacher identified as CIA proprietaries or assets numerous savings and loans, including Aurora Bank in the Denver area, Silverado Bank Savings & Loan, Red Hill Savings and Loan, Hill Financial, Indian Springs State Bank, and many others. He described the flow of money from, for instance, Silverado Bank Savings & Loan to start up Hill Financial and Red Hill Savings and Loan. Much of the data that he and other deep-cover CIA operatives gave me still has to be analyzed. 
Russbacher made reference to CIA contract agents he encountered, including Heinrich Rupp and Richard Brenneke who worked with the CIA at Aurora Bank in Denver and elsewhere, and Anthony Russo at Indian Springs State Bank in Kansas City. 
Russbacher described the links between CIA proprietaries and organized crime and how the CIA worked with the group in Denver, looting the HUD program and savings and loans of billions of dollars. He described the corrupt practices of groups in the Denver area, such as MDC Holdings, Richmond Homes, Mizel Development, and their nearly one hundred subsidiaries, partnerships and other legal entities. 
Describing his role in two of the savings and loans, Russbacher stated: “I held the position of Chairman of the Board [Red Hill Savings & Loan and Hill Financial]. Let’s back up here, and erase that last thing. Robert Andrew Walker111 held the position of Chairman of the Board.” Russbacher used the CIA-provided-alias of Walker for those positions. 
Russbacher described the massive corruption associated with the new Denver International Airport that included bribes, land flips, and sham loans. 
Typical CIA Proprietary Operation 
An example of how the CIA operated secret companies in the United States is seen from the companies that Russbacher operated for the CIA. Russbacher incorporated and operated many CIA proprietaries, hiding the CIA ownership by showing the stock owned by CIA-related personnel. At the top of the group of companies that Russbacher operated for the CIA was National Brokerage Companies, a general partnership located in Missouri. Under National Brokerage Companies were a number of other general partnerships and corporations. The stock in these corporations was held in several names, including Gunther Russbacher and his CIA-provided aliases, Emery Peden and Robert A. Walker. 
Covert CIA personnel, installed as directors, controlled the various companies and corporations. In 1986 the NBC name was changed to National Brokerage Companies International (NBCI). 
Russbacher gave me the names of many financial institutions that he said were CIA proprietaries. He described in great detail his role in Red Hill Savings & Loan and Hill Financial in Red Hill, Pennsylvania. He named other CIA proprietary financial institutions, including National Brokerage Companies; National Fiduciary Trust Company; National Financial Services; Crystal Shores Development; and Clayton Financial Planning, which had several divisions, including Agean Lines and Europa Link. Europa Link allegedly owned W.P.R. Petroleum International, which used leased oil tankers for oil delivery to major refineries. 
Also, Badner Bank, which funded Germania Savings and Loan; Commerce Bank of Missouri; Carondolet Savings and Loan in St Louis; Mega Bank Group which owned First State System and operated in about eighteen states; Shalimar Perfumes; Shalimar Armaments; Shalimar Chemical Laboratories; R & B Weapons Systems International, Inc.; Pratislaja Brenneke Munitions Amalgam; KRB Weapons Delivery System; National Realty; and others. 
Russbacher said that National Brokerage Companies (NBC, Inc.) was incorporated in Missouri in 1980, and that it was the parent company for many others. He said part of its initial funding came from Silverado Bank Savings & Loan via Red Hill Savings and Loan and Hill Financial. Among its subsidiaries were National Leasing; National Realty (under National Leasing), and Crystal Shores Financial Services. 
111 One of the aliases provided to Gunther Russbacher by the CIA. 
A division under Clayton Financial Planning was Commercial Federal Savings and Loan, which had connections to National Fiduciary Trust Companies. 
A division under Clayton Financial Planning was Carondolet Savings and Loan, which also had financial connections to National Fiduciary Trust Companies. 
Russbacher stated that under National Fiduciary trust Companies were Badner Bank and International Commerce Bank Holding Company. Under Badner Bank were various airlines, including Zantop Airlines; Tower Airlines; Southern Air Transport; Apollo Air; Virgin Air, and RAW World Service. Under International Commerce Bank Holding Company were Baja Enterprises; property at Cabo San Lucas; Hotel Cabo San Lucas; and Cabo Airport. 
Russbacher described the practice of the CIA having their own banks as proprietaries, and named, among others, Commerce Bank of Missouri, and particularly the one in Clayton, naming as a CIA asset the manager, John Bittlecomb. He described the CIA operation known as Valley Bank in Phoenix, which he said played a key role in moving money for the October Surprise operation (and described by former Mossad agent Ari Ben-Menashe in his book, Profits of War). 
There were several European holdings, including Shalimar Perfumes, Shalimar Arms, and Shalimar Chemical Laboratories. Under Shalimar Armaments was R & B Weapons Systems International, Incorporated. Under R & B were two companies, Pratislaja Brenneke Munitions Amalgam and R & B Weapons Delivery Systems. It all sounds rather complex, and further explanation follows in subsequent pages. 
Moving Huge Sums of Money Overseas 
Russbacher described how the CIA moved large quantities of money from U.S. financial proprietaries during the last few years to offshore corporations and banks, including those in the Antilles and the Cayman Islands. “The Agency is deadly afraid of exposure within the United States,” Russbacher said, “and they have begun to siphon off large and tremendous sums of money to foreign accounts. It must be borne in mind that in the last three years there has been a systematic removal of funds and capital assets from these [CIA] corporations.” 
Russbacher described how the CIA used the savings and loan institutions to fund their covert operations in the United States and abroad and add to the massive amount of funds secreted in foreign financial institutions. Parallel operations were run by different CIA divisions and directorates, using code names to identify the various operations. Included in the operations affecting financial institutions were Operation Gold Bug, Operation Cyclops, Operation Interlink, Operation Woodsman, Operation Fountain Pen, Operation Thunder, Operation Blue Thunder, and Operation Moth. 
Operation Woodsman 
Operation Woodsman was a CIA operation that targeted specific companies, forcing the owners out and taking over the assets. Russbacher described several of these operations in which he himself was directly involved. Information used to carry out Operation Woodsman, such as the financial condition of targeted companies, could be obtained by the CIA through a database called the Black Flag file, which is located on a Cray computer in Washington and which is accessed through a government Sentry Terminal (government-secure computer). The Cray computer also contains a list of federal judges, trustees, law firms, and lawyers who covertly work to carry out Justice Department and CIA activities (such as the San Francisco law firm used against me in the sham California action). Referring to Judicial Involvement 
Russbacher repeated what he had described to me during the past few years about the role of federal judges in the corruption: “More than fifty percent of the judges are compromised through secret bribes or retainers.” The bribes take many forms. Sometimes through gambling chips at Atlantic City and Las Vegas casinos, in the form of gratuities, sometimes through second and third parties, inheritances, anything that will whitewash the funds in the property that is given to the judges or trustees. Russbacher stated that these funds are often hidden in offshore financial accounts, adding: 
Let’s say it is property or stock certificates. We’ll have phony documentation set up and put in place and show where the stock certificates or the property or the legacy came from. Even if we have to create our own trust with which to do it. It’s not like we don’t have legally capable counsel available. Now understand this too: these judges received this heavy money regardless of the fact that they have cases pending or not. They get paid whether they do something for us or not. 
Russbacher elaborated on the procedure for gaining access to the Cray computer in Washington, telling how the identification number is first entered and then the security code. 
Russbacher stated that he learned about Operation Woodsman when he was assigned to CIA headquarters at Langley, Virginia. “Every damn thing, every crooked thing that the DOJ has done,” he said, “involving any and all law firms, is registered under the code name that I have given you.” Russbacher continued: 
Our intent was to take over the tangible assets of the operating license and licenses, we go through the predetermination hearing with the judge, trustee and the simple debtors, and then we buy time to reorganize the lines, and transport capabilities. In other words, we use them for ourselves, these little feeder airlines; we try to keep them alive anywhere from six months to a year and a half. 
Slowly we set our operations and leverage to where the existing financial records are changed to reflect prior debt encumbrance. We falsify the records. We take an existing carrier, their routes, their equipment, push our schedule and freight manifest through their licenses, and then we ... we have no interest in developing a good business or making a go of it, out of the indentured one that we have taken over. 
Russbacher described how the system uses lawyer spotters throughout the United States to identify companies that have large equities but have cash problems CIA proprietaries buy up the company’s receivables and indebted ness, and force the company to sign papers making them susceptible to immediate takeover if their financial situation deteriorates. The CIA proprietary then acts to make this happen, after which the owners lose control. Chapter 11 would be included in Operation Woodsman. 
The CIA may loot the company and then put it into Chapter 7 or 11 bankruptcy courts, where several options are available to make off with the assets or to have the indebtedness discharged. Russbacher told how the CIA has about seventy percent of the trustees and many of the federal judges in bankruptcy courts on retainer. He also elaborated upon the practice known as “drop-offs” that force companies into Chapter 11, involving companies with valuable assets that have a cash crunch. 
Russbacher described some of the company takeovers in which he was directly involved, naming Midway Airlines, Southern Air Transport, and Frontier Airlines. In some cases, the targeted company would be liquidated and, as in the case of Frontier Airlines, the aircraft would go to a CIA proprietary. In Frontier’s example, most of the aircraft went to the CIA proprietary, Southwest Airlines. In the case of Southern Air Transport, the targeted corporation was kept as a CIA proprietary. 
According to Russbacher, referring to the CIA takeover of Chicago based Midway Airlines during the last year of its existence, Midway Airlines was first targeted in 1986 because it had a high debt-to-asset ratio, making the airline vulnerable to the takeover scheme of Operation Woodsman. CIA assets began purchasing Midway’s debt with the intention of taking over the company and then liquidating the assets in Chapter 7. 
Russbacher told how Midway tried to get absorbed by another carrier, Northwest Airlines, and that the CIA blocked it, as it wanted Midway’s aircraft. The CIA got Justice Department lawyers and the IRS to take actions against the airline through criminal and tax proceedings through mostly bogus criminal and contempt charges, explaining: 
We put together a bunch of phony allegations, mismanagement of funds, possible fraud. Ninety-five percent of it is totally untrue and unfounded, but the five percent that does remain true and factual are at the forefront, and you push those. Some of the directorships on the Board of Directors were subverted and suborned to CIA tactics. 
The plan by Northwest Airlines to absorb Midway fell through after both Midway and Northwest were pressured by government agencies acting on behalf of the CIA. This scheme caused Midway to go out of business, so the airline’s Boeing 737 aircraft went to another covert CIA operation: Southwest Airlines. 
Russbacher described similar CIA takeovers that developed into larger companies instead of being liquidated for their assets. These included Southern Air Transport (which started out as Savannah Charter Airlines); Central Airlines of Fort Worth; Allegheny Airlines; and others. Russbacher explained that some of the directors had their own businesses and that it was easy for the CIA with its control of other government agencies to put pressure on them, adding: “They were not influenced; they were dictated to.” 
I asked: “How could they be dictated to?” Russbacher replied: “The director, who has other business interests and probably a business of his own, suddenly finds himself in a financial quandary due to various tactics used by the CIA. We put him under our thumb. If he decides not to play ball, we threaten him with criminal charges.” 
This tactic was reportedly used against Charles W. White of Houston, Texas, who was in partnership with CIA-related Jim Bath. When Bath wanted to withdraw $450,000 from a company composed of private investors and use it in a CIA-related operation, and White refused, the power of the courts and covert agencies were misused against White. After many lawsuits, White was financially destroyed. 
Russbacher stated that Justice Department lawyers worked hand in hand with the CIA in Operation Woodsman and other schemes, and that the Agency not only has its own private lawyers but “government lawyers on staff as well as the judges. It’s a fixed deck all the way across.” Russbacher described another CIA takeover: “We did the same thing with hotels,” describing how the CIA took over the Intercontinental Hotels (IH) chain from Pan American Corporation through its CIA front, Global Hotel Management out of Basel, Switzerland. 
Among the airlines that were liquidated after acquisition were Central Airlines out of Fort Worth (the agency’s first airline acquisition under Operation Woodsman) and Frontier Airlines of Denver. Russbacher described how the CIA created so much friction between Frontier and United Airlines, who had proposed taking over Frontier that the deal fell through. These problems included union and other problems. The Boeing 737s then went to another CIA proprietary, Southwest Airlines. 
Russbacher stated that one reason Southwest Airlines was making money (when all the other airlines were losing money) was that the airline has significant income from CIA- generated business that shows as income on its records, but the source of the income was bogus. 
Connections Between the CIA and Those Looting America’s Financial Institutions 
Russbacher described the relationship between the CIA proprietaries and the Keating group, adding, “The Keating group is a very small group. There is a much larger group that we [CIA] dealt with, of which Keating was only a part.” In response to my question as to why the Keating group would work with the CIA, Russbacher stated, “To keep the heat off their backs for one. And number two, some of the companies that were involved were actually proprietary operations.” 
Russbacher made reference to Anthony Russo, an officer in Indian Springs State Bank, who had financial interest in a CIA proprietary airline, Global International Airways. In 1982 the airline owned by Farhad Azima, an Iranian-born naturalized U.S. citizen, had a fleet of 14 jetliners, making flights to remote airstrips in Central America, carrying military equipment outbound from the United States and often carrying drugs on the return flights. Global flew shipments for CIA operative Edwin Wilson and his company, Egyptian-American Transport and Services Corporation (Eatsco). 
Well-known national figures involved with Global included Thomas Clines, Theodore Shackley, Richard Secord, Hussein Salem, and others. 
Bogus Bearer Bonds 
The CIA had other corrupt schemes. Russbacher described another ongoing CIA operation inflicting hundreds of millions of dollars of losses upon U.S. financial institutions. In this operation, CIA proprietaries obtained loans from various financial institutions on the basis of pledged bearer bonds, all of which were bogus. After obtaining the loans, some CIA proprietaries looted the assets and then filed Chapter 7 or 11 in federal courts where they had control over bankruptcy judges and trustees and were represented by covert Justice Department and/or CIA law firms or fronts. 
Russbacher was cautious in divulging the secrets of CIA operations, even though he was trying to blow the whistle on some of its worst and most damaging activities against the United States. As time passed and with my constant probing into different areas of CIA activities, and as Russbacher learned that other CIA operatives gave me information which he had withheld from me, he gradually gave me more data. In early 1993, as I learned the operational names of many of the CIA operations from other sources, including Trenton Parker and Michael Riconosciuto, Russbacher opened up and gave me code names and data. He stated that different divisions or groups within the CIA ran parallel operations and had different names for similar activities. Some of them include the following: 
Operation Interlink (IL) 
Operation Interlink (IL) was the code name for an operation involving financial institutions, whose goal was to raise money for covert CIA activities, and laundering the funds into secret CIA offshore bank accounts 
Operation Cyclops (OC) 
Operation Cyclops was the name used by the Pegasus unit of the CIA and was an overview over most other Pegasus operations. It included all types of covert financial operations including proprietaries involved in the HUD and the savings and loan programs, and bogus bearer bonds. 
Operation Moth (MH) 
Operation Moth was one of the Agency’s names for the operation involved in the savings and loan fraud. 
Operation Gold Bug (GB) 
Operation Gold Bug involved the overall scheme of generating money through various financial activities. Under Operation Gold Bug were a number of other operations. Operation Gold Bug was the development of national and international financial programs to develop sources of income that would be available on a regular basis to support and carry out covert CIA activities domestically and internationally. 
Russbacher incorporated and operated over a dozen CIA proprietaries. He outlined the tactics used to loot companies of their assets. When used against savings and loans, Russbacher’s section of the CIA gave it the name, Operation Moth. The highly secret Pegasus group within the CIA gave this program the name of Operation Gold Bug. The intent of both groups and operations was to loot the assets of targeted financial or other institutions and wealthy people. The overall operation that targeted other companies was called Operation Gold Finger. 
Operation Thunder (TD) 
Operation Thunder was another name for a CIA covert operation that included the HUD and savings and loan fraud, bogus bearer bonds, and other financial schemes. 
Russbacher stated that the home base for Operation Thunder was New Orleans and was initially located in a private CIA proprietary. He stated that today the cover for the operation was Telemark Communications, one of the biggest companies in the United States and a CIA proprietary. As with other CIA proprietaries, the top management consisted of Agency people who had liaison with CIA field people who were contract officers or agents, and particularly lawyers and law firms. Russbacher described the heading sheet on correspondence pertaining to Operation Thunder. 
On the very top of the sheet were the words: 
Operations Memorandum. 
Classification: Top Secret: SOG-SI/6 
Copy Number: 4 [or whatever number of copies were authorized] 
SOG/ALPHA/-DETACHMENT TS-TS-Q/SOG-D/F: 701 
FP399689 
Staging Area: New Orleans, Louisiana 
Operation Blue Thunder (BT) 
Operation Blue Thunder related to the destruction of institutions, including taking them over or forcing them into Chapters 7 and 11. After taking them over, the CIA would take over the corporation’s license rights. Basically, it destroyed companies and picked up the assets at fire sale prices. 
Operation Fountain Pen (FP) 
Operation Fountain Pen started with Bank of Zaire, a CIA proprietary, buying banks, corporations and other financial institutions with bogus bearer bonds, treasury bonds, or duplicate issues. 
Bogus Bearer Bonds 
Several of the covert CIA operations used bogus bearer bonds that had a twenty or twenty-five year due date and were used as collateral for multimillion- dollar loans. 
After obtaining the loans and laundering the money into other secret proprietaries or offshore financial vehicles, the companies would often file Chapter 7 or Chapter 11. The lender would then think the bonds given as collateral covered it, and would not find them to be bogus until many years later. In some cases the CIA proprietary would make interest payments on the loans secured by the phony bonds. The primary criminal act in those cases would be using forged certificates to obtain loans. 
Aiding and Abetting by State Officials 
Russbacher stated that in 1986 some of the CIA financial institutions he operated were compromised, that connections between the secret proprietaries and members of Congress were in danger of being exposed, and the decision was made to shut them down. He told how Justice Department and CIA personnel conspired with Missouri officials to remove all traces from the state records that the CIA corporations had been incorporated as Missouri Corporations. 
Referring to the shutdown of several CIA proprietaries linked to the 1986 downing of a CIA aircraft over Nicaragua, the famous “Hasenfus” flight, Russbacher stated: “All records that were available to the Department of State or to the [state’s] Attorney General’s office have been seized or closed to where the public cannot get hold of them.” 
Money-path for Bribing Federal Judges, Trustees, Law Firms 
I was prompted to ask Russbacher about payoffs to federal judges after private investigator Stewart Webb heard of a bribe connection between U.S. District Judge Sherman Finesilver in Denver and a corporation in Ireland. After he passed the information along to me I questioned some of my CIA contacts to determine if they knew anything of it. 
In response to my questions, Russbacher explained the path of money for bribing federal judges, trustees, law firms, and lawyers. Russbacher stated that the money for these payoffs came from a company located in Dublin and incorporated in Ireland, called Shamrock Overseas Disbursement Corporation. Its telephone is listed as Shamrock Overseas Courier Service. The function of this company was to place money at regular intervals into numbered bank accounts for the recipients to draw upon. Russbacher chuckled as he stated that the Chief Executive Officer at Shamrock Overseas Disbursement was the same person with whom he had worked at other CIA proprietaries: Donald Lutz. 
Russbacher and Lutz were on the management staff of various CIA proprietaries, including Red Hill Savings and Loan and Hill Financial located at Red Hill, Pennsylvania, and at Silverado Bank Savings & Loan in Denver. Russbacher stated that the routing of the money funded by Shamrock was “From the Netherlands Antilles. And in turn came from Grand Cayman; that in turn came from the Southern Bank in Florida; that in turn came from Southern Savings and Loan in Illinois; which in turn came from National Brokerage Company.” 
“Where does the money originally come from? Is it from stolen Chapter 11 assets?” I asked. Russbacher replied, “That’s part of it. It is a conglomeration of funds. It is what we call an all- purpose account. Arms shipments, the other stuff [drugs, weapons] that we were transporting back and forth. It is what we call the divisible surplus.” 
I asked if the federal judges he referred to, as recipients of these funds, were only Bankruptcy Court Judges, to which Russbacher replied, “No, that’s not true. You have to include the DJs [U.S. District Judges] too.” “How is it determined the amount that each judge will get, and what judges are paid off?” I asked. Russbacher replied: “It is predetermined. If you will remember from one of my earlier tapes, I told you that the judges receive their funds regardless of whether they have heard a case in six months or not.” 
“How do they determine which judges are recipients, what qualifies them to be on the payroll?” Russbacher replied, “The fact that they work hand-in- hand with the trustees, and they grant us full power to basically do what we [CIA] want in Chapter 11, 13, and 7 proceedings.” “Are there any other similar corporations in the United States like Shamrock?” 
“No, Rodney, they are all funded from Shamrock. In other words, if you pull the plug on Shamrock, you have it all.” 
Russbacher explained how the recipients pick up the money. “They can get it overseas and pick it up, or they can go to Toronto and pick it up there, at the Royal Bank of Canada.” Russbacher stated, “When they go in to make a withdrawal, they request to see the President or Chief Account officer.” Russbacher explained that this scheme is part of Operation Woodsman, explained in earlier pages. 
Russbacher explained that the recipient’s available funds will be found on the bank’s terminal screen and that “all they have to have is the account number. No ID is required. Just give them the account number and the four digit identification number.” Russbacher stated that Royal Bank of Canada, Manufacturers Hanover Bank in New York, and Valley Bank in Arizona, cooperate in this scheme. 
Russbacher repeated what he had told me in the past: that funds would also be disbursed to the recipient judges, trustees, or law firms at gambling casinos, including MGM, Harrah’s and Resort in Atlantic City, and Frontier, Stardust, and Horseshoe in Las Vegas. The CIA gave the money to the casino, which in turn gave gambling chips to the recipients when they arrived, after which the chips are cashed in for money. In some cases the casinos report the money as winnings and income tax withheld. “Would your knowledge of this operation be because you were with NBC (National Brokerage Company),” I asked. “Yes, because we made deposits and withdrawals through that route,” he replied. 
Black Flag File (BFF) 
Russbacher stated that he had seen the list of recipients in this scheme on the computer database while he was at the CIA headquarters at Langley, explaining that the database is called the Black Flag Files (BFF). He stated that the database is on a Cray computer accessed from any government Sentry terminal by typing in an identification entry number. After a flag shows up on the screen, typing in the access code: 3A46915W. 
I often asked Russbacher to accompany these statements with a declaration as to their truthfulness, and I did during this questioning. He had also given me declarations attesting to the truthfulness of written information. Russbacher replied: “Sure. All the information that we have discussed on this date, May 17, 1993, from approximately 2020 hours Central Daylight Time, the declaration made to area code 510-944-1930, Rodney Stich, by Gunther Karl Russbacher, 44840417, Captain USN, is true and 
correct as to the best of my knowledge and belief.” 
Where is the Money 
Losses of approximately half a trillion dollars have been the estimated direct cost of just the savings and loan debacle. But where did the money go? It has never been sought or located. The theft of $2 billion by Lincoln or $2 billion by Silverado is a long way from $200 to $500 billion. Neither Congress nor the Justice Department has made any attempt to determine where this money went. Finding it would relieve the American public of a debt load that is affecting the American economy, resulting in a reduction in benefits to individual Americans, thereby causing a staggering tax burden. There is no way that such a huge sum simply evaporated without a trace. 
My CIA sources tell me that many of the funds looted by the CIA, organized crime, and such groups as the Denver group have been hidden in offshore financial institutions. Some of the funds that have gone overseas have returned to the United States through foreign shell corporations, buying up vast quantities of U.S. real estate and assets. 
112 Russbacher was President of NBC, using the alias of Emery J. Peden, and his former wife, Peggy J. Russbacher, was Executive Vice President. There was a National Brokerage, Incorporated, a National Brokerage Company, and numerous other divisions operated by Russbacher. 
One of the Many Ways in Which Crime Money is Reportedly Hidden 
Investigator Stewart Webb heard from one of his sources that hundreds of trusts are filed with the state of Colorado that contain huge amounts of money looted from the HUD and savings and loan frauds, and also from drug money laundering. He and Russbacher said many of the trusts were filed in the County Recorders office in Denver and various Colorado counties, including Baca County. In seeking further information, I asked another CIA source, Gunther Russbacher, “Do you know anything about the Baca trusts?” He replied, “How in the hell did you find out about those?” Russbacher was especially well informed. He told me that many of the trusts were set up by Denver lawyer Norman Brownstein, a key member of the Denver group involved in the HUD and savings and loan scandals. These trusts were reportedly set up for the benefit of such insiders as Larry Mizel, Leonard Millman, MDC Holdings, Richmond Homes, and hundreds of other related legal holdings. 
Most of the actual funds associated with these trusts are reportedly located outside the United States. He said that he himself had filed trusts in Baca County for his children. Russbacher said that the location of the money covered by these trusts, which he stated amounted to billions of dollars, were located in offshore financial institutions. 
This money includes the billions of dollars stolen from the HUD and savings and loan programs, the billions looted every year from Chapter 11 assets, drug profits, and the other dirty schemes involving the characters listed within these pages. If this information is correct, and if the sources of hidden money divulged to me by my CIA sources were traced, possibly large amounts of the huge losses inflicted upon the American people could be recovered. 
Billions of Hidden Taxpayers’ Money 
Russbacher had several times stated in response to my questions that many billions of dollars of money obtained by CIA proprietaries from the American public were hidden in offshore financial institutions. In Colorado there are located well over a thousand trusts hiding many billions of dollars looted from the American public. 
Continued Looting of America 
Many of the same crooks that caused billions of dollars in losses were reaping profits through their inner knowledge and political connections, enabling them to manipulate the agency responsible for selling off assets of the seized savings and loans, the Resolution Trust Corporation (RTC). While waiting for senate confirmation as Clinton’s nominee to head the RTC, Stanley G. Tate, announced that upon being confirmed he would be exposing “ubiquitous mismanagement, waste, and fraud at the RTC.” Tate told reporters113 that he planned to release a 36-page statement during the nomination hearings supporting his charges. Tate had discovered the corruption while holding a temporary position on the board overseeing the RTC. Senator Donald W. Riegle, Jr., one of the many senators who ignored my reports of the corruption in federal government, refused to conduct confirmation hearings for the RTC nominee. While Riegle blocked Tate’s confirmation, others were making death threats against the nominee. As if these acts were not enough, anonymous attacks were made upon Tate by RTC employees. Media sources wrote articles intended to block his confirmation. The coordinated campaign succeeded; Tate withdrew his acceptance of the nomination on November 30, 1993. Again, public ignorance permitted the same scum to continue looting America. 
Relief For Felons 
The conduct of such savings and loan operators as Don R. Dixon and Edwin T. McBirney caused billions of dollars of losses that the American taxpayers will be paying on for many years. They used taxpayer funds for sexual parties, to hire prostitutes, enjoy lavish life styles, none of which came out of profits. There weren’t any. In 1993, McBirney was sentenced to fifteen years in prison and Dixon was sentenced to two consecutive fiveyear terms. 
In July 1994, Justice Department lawyers and a federal judge, Robert Maloney, cut ten years from Dixon’s sentence, causing his release that same year, after serving a fraction of his prison sentence. McBirney was scheduled for release shortly thereafter. The excuse used was good behavior. But there isn’t much else that can occur in federal prison. It is a standard practice where the CIA or some other government agency is implicated and a defendant protects this relationship, that a reduction in prison sentence is promised and then carried out at a later date when media attention no longer exists. An inordinate amount of the huge savings and loan losses occurred in Texas, where the RTC recovered only about five cents on every dollar of the losses incurred.114 Despite the many people committing the fraud, the RTC issued only about two dozen subpoenas as part of their investigations, which are necessary to follow the money trail to learn where the money went, such as bribes to politicians, kickbacks, money laundering to off-shore bank accounts. The RTC did not issue any subpoenas in its “investigation” of 86 of 137 failed Texas savings and loans. Comparing this with the investigation into Madison Guaranty Savings and Loan as part of the Whitewater investigation, over 160 grand jury subpoenas were issued solely by special counsel Robert B. Fiske Jr. 
“Protective Investigations” 
If the RTC had issued the subpoenas required by the nature of the savings and loan crimes of the 1980s, it is probable that the involvement of the CIA and many political figures would have been identified. Also, the way the RTC handled the sales of the seized savings and loan assets made possible even more looting of the American taxpayers as many of the same crooks purchased the seized real estate for pennies on the dollar. A New York Times article (July 23, 1994) headed, “The R.T.C. let crooked thrift owners get away,” stated: 
The failures of the RTC to properly pursue the crooked parties, or to obtain maximum money for the seized thrifts, were too purposeful to be simply gross incompetence or negligence. Because of the involvement of people from both the Republican and Democratic parties, none pursued the needed investigations to determine where the enormous amount of money went in the gory looting of U.S. taxpayers. 
Roger Altman, involved in the Whitewater matter, was Deputy Secretary of the Treasury from April 1993 until March 1994, and within a month of taking that position he reversed the RTC’s attempt to get Congress to extend the federal statute of limitations for prosecuting savings and loan wrongdoing. Altman said that the RTC no longer needed the extension, when actually this was obviously not correct, since there was virtually no investigation of the big-time wrongdoers. 
Altman commissioned a task force that issued a report to Congress defending the RTC investigations and belittled the loss to the American public by the Texas savings and loans. The New York Times article of July 23, 1994, stated, “A former chief R.T.C. investigator in Texas told Congress last month that this was a ‘whitewash of a national scandal.’“ Former Texas senator Lloyd Bentsen and then Treasury secretary, and Altman, campaigned against extending the federal statute of limitations, insuring that many of the savings and loans thieves would be protected against criminal prosecutions, and that the recipients of the looted money not be discovered. 
Fraud Was No Secret 
It is important to recognize that the looting of the savings and loans were a secret only to the people that would have to pay, and that is the American public. Thousands of government personnel, including investigators in the various divisions of the U.S. Department of Justice, including the FBI, the many CIA personnel throughout the United States, and others, could not have been unaware that this massive fraud was going on. Possibly the CIA involvement in the looting of the savings and loans, the HUD program, and other areas still to be described, was the reason that the criminal activities were covered up. 
There is no more powerful government agency, for cover-up and obstruction of justice, then the people in control of the United States Department of Justice, the same people who covered up every major scandal and subversive activity described within these pages. I first discovered this practice while an FAA inspector, and in the subsequent years this obstruction of justice became even more obvious. 
Adding to Savings and Loan Looting 
Shortly before this book went to print, I started learning about another scam for which Americans will someday have to pay. This involved HUD mortgage insurance that was paid by the buyers in escrow for the full life of the loans. The money was then siphoned off and the insurance never purchased. Formerly, the buyer of HUD properties paid their insurance premiums on a monthly basis with their mortgage payments. But in 1983, the same Congress that made possible the looting of the savings and loans passed legislation known as “HURRA” (Housing and Urban-Rural Recovery Act) that required up-front payment for years of mortgage insurance premiums. The intended looting of these funds is the most probable explanation for this change. Massive theft of these funds then occurred, with government cover-up of the scheme. 
Among the companies involved in these activities was the American International Group (AIG), which was the head of hundreds of companies and trusts throughout the world. Among the reinsurance companies controlled by AIG were Transatlantic Holdings and Putnam Reinsurance. 
The HUD mortgages for which up- front mortgage insurance premiums were paid were put into “pools” of mortgage loans with Government National Mortgage Association (GNMA), which were then sold off on the secondary market to investors. When large numbers of foreclosures occurred during the 1980s, huge losses were incurred when the mortgage insurance did not exist to pay for the financial losses. CIA asset Gunther Russbacher described to me how he discovered this scam while he headed the CIA’s Red Hill Savings and Loan: 
They were using reinsurance companies with policy premiums that were never paid. Money was paid for the reinsurance but it was never paid [to the reinsurers]. The policy money, the premiums, were never paid in to where the policies were active. American International Groups was one of the big ones [involved in the scam]. Transatlantic Holdings was involved, as well as Transpacific Holdings. Maurice Greenberg, a close associate of Denver’s Leonard Millman, headed some of these companies. Dublin International Insurance was part of AI [American International]. We insured Putnam and Company. 
Imposing Secrecy on the Excuse of “National Security” 
It is probable that the CIA involvement in this scam is what kept the Justice Department from prosecuting those guilty of the mortgage premium insurance fraud, using the “national security” excuse for withholding this knowledge from the public. 
As in other scandals, it pays to have “friends” in the right places to act as damage control. In 1997, according to Standard and Poor, former senator from Texas, Lloyd Bentson, and Carla Hills, were officials in the Department of Housing and Urban Development (HUD), keeping the lid on this scandal. 
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