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Tuesday, June 04, 2019

Is Joquin Guzman, AKA "El Chapo" Planning another Prison Escape?

A lawyer for Mexico's most notorious drug kingpin, Joaquin “El Chapo” Guzman, dismissed prosecutors’ arguments that he might try to escape from the Manhattan prison where he awaits sentencing saying he should have access to drinking water, sunlight and fresh air because they “are basic human rights.”

“Mr. Guzman has not had any access to natural sunlight or fresh air for more than 2 years now since he has been extradited to the United States,” Guzman’s attorney Mariel Colon Miro told Fox News on Monday.

“It’s concerning because our country prides itself of being respectful of human rights yet the U.S. government is not doing it for Mr. Guzman.”

Colon Miro said she filed an original motion for Guzman’s conditions of confinement in Manhattan’s Metropolitan Correctional Center on May 9th requesting that her client would be allowed at least 2 hours of outdoor exercise a week, 6 water bottles a week that he would be allowed to purchase from the correctional facility’s commissary as well as access to a general commissary list, and that he would be allowed to access a set of earplugs to help him sleep.

She said on May 23rd the government filed a response asking U.S. District Judge Brian Cogan to deny all 4 of his requests alleging that he should not be allowed to exercise outdoors because of the risk that Guzman, who broke out of Mexican prisons twice, might try to escape again.

Prosecutors also cited an unsuccessful 1981 escape attempt at the same jail, in which a prisoner’s accomplices hijacked a sightseeing helicopter and tried to cut through the wire screening surrounding the recreation area. When that didn’t work, prosecutors said, they rammed the helicopter into the screen and then dropped a pistol to one of the inmates on the roof. The incident, even though it was foiled, “resulted in a standoff between two armed inmates and more than 100 armed, flak-jacketed police officers and prison guards in a population dense, urban area,” the government response stated.

The response said “any outdoor exercise would be particularly problematic for this defendant” who “successfully planned and executed elaborate escapes from two high-security penal institutions.”

This Sunday, Colon Miro said she filed a reply to the government’s response asking the Brooklyn federal judge to grant Guzman’s requests explaining that an attempted escape was “completely different” from the example supplied in the government response. She said Guzman should be granted outdoor access especially because he is not allowed to communicate with anyone but his lawyers and, therefore, is in no position to try a similar escape.

Judge Cogan sided with the government and denied all the requests in an order filed Monday saying the “defendant’s conditions of confinement are tailored to his specific history, including two prior prison escapes, and his specific crimes, including previously running the Sinaloa Cartel from prison and engaging in multiple murder conspiracies to kill his enemies, which were proven beyond a reasonable doubt at trial.”

Cogan also said the Government’s example of the prison escape attempt is relevant given Guzman’s history saying it would be “plausible that defendant could try to recreate such an escape attempt if the opportunity presented itself.”

The judge denied access to the general population commissary citing “security reasons” since many items on that list can be “weaponized.”

He also said that Guzman’s motion to purchase 6 water bottles a week is “denied as moot” since prison records show he has been receiving 6 water bottles a week since April 2019.

Cogan also denied Guzman’s request for earplugs saying the Metropolitan Correctional Center does not allow any inmate to use earplugs “due to legitimate safety concerns that the inmates would not hear guards in an emergency or would use them to ignore the guards.”

“I am shocked because the thing that we were requesting touched constitutional concerns and they were basic human needs,” said Colon Miro in response to Judge Cogan’s decision.

Michael Lambert, another attorney representing Guzman, told Fox News, “We’re distressed by the courts sacrificing security above all else in spite of valid humanitarian concerns.”

“We’re contemplating next moves,” Lambert said. “We are dismayed by this step back but we have no intention of abandoning this issue,” he added.

Colon Miro said one option is to petition the United Nations Office for the Coordination of Humanitarian Affairs. Another option she said she is considering is to petition to the Inter-American Court of Human Rights. “What Mr. Guzman is going through right now is plain cruel,” Colon Miro said.

John Marzulli, a spokesman for the office of U.S. Attorney Richard Donoghue, which prosecuted Guzman, told Fox News he has no additional comment.

Guzman, 62, will spend the rest of his life behind bars after being found guilty in February of trafficking tons of cocaine and other drugs into the U.S. as the leader of the Sinaloa Cartel. The three-month trial detailed grisly killings, a bizarre escape and drugs hidden in jalapeno cans.

Guzman escaped from jail in 2001 by hiding in a laundry bin and managed to evade authorities by stowing away in one of his mountainside hideaways. He was recaptured in 2014 but escaped a year later through a mile-long lighted tunnel. Guzman was captured again nearly six months later. He is scheduled to be sentenced on June 25.

Thanks to Talia Kaplan.

Monday, June 03, 2019

High-Level Member of Four Corner Hustlers Street Gang Arrested on Federal Drug Charges

A high-level member of the Four Corner Hustlers street gang has been arrested on federal drug charges for allegedly selling wholesale quantities of heroin on the West Side of Chicago.

RAYMOND BETTS, 52, of Riverdale, is charged with conspiracy to possess a controlled substance with the intent to distribute. A criminal complaint filed in federal court in Chicago accuses Betts of selling or directing sales of heroin on eight occasions from December 2018 to March 2019. Seven of the alleged sales occurred in the Austin neighborhood of Chicago, while one deal was allegedly conducted in south suburban Riverdale.

Two other alleged members of the gang are also charged in the conspiracy: ANGELA BELL, 48, of Chicago, and MAURICE WILLIAMS, 50, of Riverdale. All three defendants were arrested. Bell appeared for a detention hearing on Friday at 1:30 p.m. before U.S. Magistrate Judge Sunil R. Harjani in Chicago. Judge Harjani scheduled detention hearings for Williams and Betts for today at 2:45 p.m.

The charges and arrests were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Timothy Jones, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; Brian McKnight, Special Agent-in-Charge of the Chicago Field Division of the U.S. Drug Enforcement Administration; Thomas J. Dart, Cook County Sheriff; and Eddie Johnson, Superintendent of the Chicago Police Department.  Assistant U.S. Attorneys Katie M. Durick and Kalia Coleman represent the government.

The multi-year investigation was conducted with the Organized Crime Drug Enforcement Task Force (OCDETF) and the High Intensity Drug Trafficking Area Task Force (HIDTA). The mission of the task forces, which are comprised of agents and officers from numerous federal, state and local law enforcement agencies, is to identify, disrupt, and dismantle the most serious drug trafficking organizations.

According to the complaint, Betts operates a drug trafficking organization comprised of members or associates of the Four Corner Hustlers. Betts is a high-ranking member of the gang and the only one to hold the title of “Prince,” according to the complaint. Betts is also the founder and leader of an enforcement or security faction of the Four Corner Hustlers known as the “Body Snatchers,” the complaint states.

The complaint describes eight transactions for a total of approximately 136 grams of heroin. The seven deals in Chicago allegedly occurred in the 5300 block of West Washington Boulevard, while the Riverdale transaction occurred in an alley near the 13800 block of South Edbrooke Avenue in the south suburb, according to the complaint. Unbeknownst to the defendants, the buyer was confidentially working on behalf of law enforcement, the complaint states.

Will the @SenSanders and @AOC Loan Shark Prevention Act Actually Create a Booming Market for Mafia Loan Sharks?

Last month, Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez debuted the Loan Shark Prevention Act, whose chief provision amounts to a national interest rate ceiling of 15%. In a video accompanying the announcement, Sanders invoked Hollywood’s version of loan sharks to illustrate his point: “You’ve got all these guys in their three-piece suits who are now the new loan shark hoodlums that we used to see in the movies. You know, in the movies, they say, ‘I’ll break your kneecaps if you don’t pay back.’ Well, I don’t know that they break kneecaps …”

Sanders’s invocation of yesterday’s leg-breakers is obviously intended to conjure the colorful figures of American imagination, from Don Corleone to Tony Soprano. But the terror that real loan sharks inflicted on immigrant and working-class families is not merely the stuff of Hollywood; it was a brutal reality for much of American history. And the ubiquity of loan sharks in American history is directly attributable to forerunners of the interest-rate ceilings proposed by Sanders and Ocasio-Cortez.

“Usury ceilings,” as interest-rate price controls were traditionally labeled, began as a paternalistic effort to protect low-income and supposedly vulnerable consumers from exploitation by greedy bankers. Yet, as well-intentioned regulations so often do, usury ceilings backfired spectacularly, primarily harming those they were intended to help. And far from shutting down loan sharks, history shows that usury ceilings have been the primary catalyst for the loan sharks that have preyed on low-income and vulnerable Americans throughout history.

The advent of industrialization saw thousands of prewar immigrants and farmers flood into American cities in search of work. The challenges of city living created unprecedented demand for small-dollar, short-term loans. Yet making small loans to wage earners was an expensive business. First, it was risky — the same factors that necessitated borrowing in the first place (low wages, periodic unemployment, and unexpected expenses such as medical bills and home repairs) translated into high loss rates. Second, the costs of small loans is high relative to the amount borrowed —operating expenses such as rent, employee wages, and utilities are very similar regardless of whether the customer borrows $50, $500, or $5,000. In order to cover losses and those operating expenses, therefore, the effective interest rate on a small loan will have to be higher.

As a result, prohibitively low usury ceilings made it impossible for working families to borrow the money they needed from legitimate lenders. Illegal loan sharks filled the void, creating a reign of terror in American cities.

In New York, future Republican presidential candidate Thomas Dewey first came to fame through his 1935 bust of the city’s loan shark racket. With 1,040% interest rates and brutal means of enforcement — including, according to the front page of the New York Times, “Beatings and Death Threats” — the operation had netted the syndicate a cool $5 million. Former Federal Reserve Chairman Alan Greenspan referred to it as an era of “virtual serfdom” for urban families trying to make ends meet.

In response to the ubiquitous problem of loan sharks, consumer advocate groups led a nationwide crusade to loosen interest rate restrictions to permit legitimate lenders to compete with the loan sharks. The reform effort culminated in the drafting of the Uniform Small Loan Law, which proposed dramatic increases in state usury ceilings. Although the proposal to raise usury ceilings was controversial at first, by mid-century the loan shark problem had largely dissipated in states that adopted the law, replaced by personal finance companies and small-loan companies operating legally.

Yet the lull in regulation, and crime, would prove short-lived. Acting under the theory that excessive access to consumer credit by working families was a primary cause of the Great Depression, many states rolled back their liberalization of interest rate ceilings. The results were predictable — and devastating to America’s working families. According to a Senate investigation, by 1968 loan sharking was the second largest revenue source of organized crime. That same year, Republican presidential candidate Richard Nixon pledged to appoint an attorney general that would “be an active belligerent against loan sharks and the numbers racketeers that rob the urban poor in our cities.” A 1969 book by a former police officer estimated the size of the illegal loan shark industry to be $10 billion per year — the equivalent of $69 billion in today’s dollars and about twice the size of the estimated $32 billion payday loan market (storefront and online combined) today in the United States.

Unfortunate borrowers were often lucky to get off with “only” a broken leg. In one 1978 criminal trial, prosecutors played a tape recording in which Louis “Blind Louie” Cavallaro of the Chicago syndicate threatened to “cut out the eyes and tongue of a man who owed him $18,000” and expressed his desire to wear the victim’s teeth “around [his] neck.” Threats involving the forcible amputation and public display of body parts usually kept private seem to have been especially popular. Usually threats, in connection with the loan shark’s menacing physique and reputation for violence, were enough to ensure timely payment, but not always. One mob enforcer confessed that when one borrower didn’t pay up, he “clipped off” a portion of the borrower’s ear and then explained that if “you pay me you can keep the rest of your ear.” If not, he would take the remainder. “Then the next day I’ll take your other ear. Then we’ll start on your fingers.” Still other delinquent customers were enlisted by the shark into criminal activity to pay off their debts.

Liberal politicians and consumer advocates were finally forced to admit that usury ceilings ended up hurting those they intended to help. In 1964, the New York state legislature opened an inquiry into the state’s billion-dollar loan-sharking racket. Sen.-elect Robert F. Kennedy, in a statement filed with the committee, recommended “altering the state laws on usury so an insolvent person who needs money for legitimate purposes might borrow it at rates that were not exorbitant.”

Kennedy’s sentiment echoed the economic and sociological consensus of the time. A year before becoming the first American to win the Nobel Prize in Economics, Paul Samuelson had appeared before the Massachusetts legislature to testify that “[f]or 50 years” research demonstrated that “setting too low ceilings on small loan interest rates will result in drying up legitimate funds to the poor who need it most and will send them into the hands of the illegal loan sharks.” He continued, “History is replete with cases where loan sharks have lobbied in legislatures for unrealistic minimum rates, knowing such meaningless ceilings would permit them to charge much higher rates.” A decade later, a Cornell study prepared for the United States Department of Justice concluded, “[T]here can be little doubt that [usury laws], at least in part, have created a black market for credit dominated by organized crime.”

The high inflation rates of the 1970s tolled the intellectual death knell for restrictive interest rate ceilings and the Supreme Court’s 1978 decision in the Marquette National Bank case effectively deregulated credit card interest rates by holding that the applicable interest rate on a credit card would be the issuing bank’s state ceiling, not the consumer’s state. The results transformed the American economy: Between 1970 and 2000, the percentage of American households with general purpose credit cards rose from 15% to 70%. And loan sharking became the thing of movies, cable television programs — and now, ill-conceived legislative proposals.

Comparing today’s financial markets to Hollywood villains diminishes the real terror that loan sharks inflicted on generations of immigrant and working-class families and ignores the pivotal role of usury ceilings in creating the conditions for loan sharks to operate. The story of the relationship between usury ceilings and loan sharking is one that’s had numerous remakes and sequels. It always ended the same way — with desperate borrowers turning to illegal lenders to get money in a pinch. Congress can pass all the laws it wants, but it can’t repeal the law of supply and demand — or the law of unintended consequences.

Thanks to Todd J. Zywicki.

Friday, May 31, 2019

Details of Alderman Ed Burke Indictment on Federal Racketeering and Bribery Charges in Connection with Alleged Corruption Schemes

A federal grand jury charged in a detailed 59-page indictment City of Chicago Alderman Edward M. Burke on racketeering and bribery charges for allegedly abusing his position to solicit and extort private legal work and other benefits from companies and individuals with business before the city.

The 19-count indictment accuses Burke of corruptly soliciting work for his private law firm from companies involved in redevelopment projects at the Old Main Post Office in downtown Chicago and a fast food restaurant in Burke’s ward on the Southwest Side. It also alleges that he corruptly attempted to assist a business owner with a development on the Northwest Side shortly after the business owner told Burke that he would engage Burke’s law firm. The firm, Klafter & Burke, specialized in seeking property tax reductions for corporate clients.

The charges also allege that Burke threatened to oppose an admission fee increase at the Field Museum of Natural History, because the museum failed to respond to Burke’s inquiry about an internship at the museum for the daughter of former Alderman Terry Gabinski, a friend of Burke's.

The indictment was returned in U.S. District Court in Chicago. It charges Burke, 75, of Chicago, with one count of racketeering, two counts of federal program bribery, two counts of attempted extortion, one count of conspiracy to commit extortion, and eight counts of using interstate commerce to facilitate an unlawful activity.

The indictment also charges two other individuals: Peter J. Andrews, an employee in Burke’s 14th Ward office; and Charles Cui, a Chicago real estate developer. Andrews is accused of conspiring with Burke to extort the operator of the fast food restaurant, while Cui allegedly steered private legal work to Burke in an effort to influence and reward the alderman in connection with permitting and tax increment financing for the Northwest Side development.  Andrews, 69, of Chicago, is charged with one count of attempted extortion, one count of conspiracy to commit extortion, two counts of using interstate commerce to facilitate an unlawful activity, and one count of making a false statement to the FBI. Cui, 48, of Lake Forest, is charged with one count of federal program bribery, three counts of using interstate commerce to facilitate an unlawful activity, and one count of making a false statement to the FBI.

Arraignments for Burke and Andrews are scheduled for June 4, 2019, at 10:00 a.m., before U.S. Magistrate Judge Jeffrey Cole. Arraignment for Cui has not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the FBI.  The City of Chicago Inspector General’s Office and the Amtrak Office of Inspector General provided valuable assistance. The government is represented by Assistant U.S. Attorneys Amarjeet Bhachu, Diane MacArthur, Matthew Kutcher, Sarah Streicker and Timothy Chapman.

The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Racketeering, attempted extortion, and conspiracy to commit extortion are each punishable by up to 20 years in prison.  Federal program bribery is punishable by up to ten years.  Using interstate commerce to promote unlawful activity and making a false statement to the FBI are each punishable by up to five years.  If convicted, the Court must impose reasonable sentences under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

Tuesday, May 28, 2019

Former Organized Crime Investigator Hired to Lead Intelligence Committee’s Sweeping Investigation into President Trump’s Foreign Dealings and Finances

When he left the U.S. attorney’s office in Manhattan in 2017, Daniel Goldman didn’t envision a future career in Washington, D.C., the city where he grew up. But now, Goldman is leveraging the very skills he honed investigating and prosecuting white collar and organized crime cases in the Southern District of New York to leading the House Intelligence Committee’s sweeping investigation into President Trump’s foreign dealings and finances.

“One of the things you learn as a prosecutor is that you need to figure out how to investigate someone without going straight at that person, particularly when you are doing covert investigations,” Goldman told The Hill in a recent interview. “You have to figure out how you are going to get materials about someone from other sources,” he added. “I think that the traditional congressional method of investigation is to go directly to the person, ask them for documents, ask them to come testify, and sort of move forward along those lines.”

House Intelligence Committee Chairman Adam Schiff (D-Calif.), a former assistant U.S. attorney himself, tapped Goldman, 43, to be the panel’s senior adviser and director of investigations in February, the same month he unveiled a probe into whether Trump or his associates are subject to foreign compromise — an outgrowth of the panel’s original Russia investigation. The probe drew immediate ire from Trump.

Goldman is one of three former assistant U.S. attorneys that make up the panel’s investigation apparatus, which also boasts a 25-year FBI veteran who led the financial crimes section and a Russian-speaking expert.

Goldman worked in the criminal division of the Southern District for a decade, prosecuting and overseeing myriad cases. He oversaw the prosecution of a Russian organized crime ring that ensnared more than 30 defendants on racketeering, gambling and money laundering charges. He also prosecuted famed Las Vegas sports better William “Billy” Walters, who was convicted on fraud and conspiracy charges in 2017 for his role in a $43 million insider-trading scheme, as well as securing convictions against members of the Genovese crime family.

Goldman’s career as a prosecutor has afforded him an integral skill in his latest job — knowing how to find “creative ways” of gathering evidence on a subject without “going directly to the source of the information,” he said.

House Democrats have opened up a bevy of investigations into Trump and his administration, producing fresh headaches for the White House in the wake of special counsel Robert Mueller’s two-year inquiry.

The Trump administration has sought to thwart the probes, accusing Democrats of overreaching and trying to score political points against the president ahead of a reelection year. Democratic leaders, meanwhile, say the administration is flouting congressional oversight powers and stonewalling legitimate investigations at an unprecedented level.

Mueller did not charge any members of Trump’s campaign with conspiring with Russia to interfere in the election, a result Trump and his allies have cheered as vindicating the president.

Republicans have also criticized Schiff and other Trump critics for pointing to what they viewed as evidence of Russian “collusion” during Mueller’s investigation — remarks which Schiff has stood by.

Democrats say more investigation is needed. Schiff is particularly interested in the potential counterintelligence risks arising from Trump and his associates’ dealings with Russians and other foreign powers.

Schiff, who said at an Axios event last week that the panel is looking to “revise the scope of our investigative and oversight work” following the release of the Mueller report, has long pointed the proposal to build a Trump Tower in Moscow as a key line of investigation.

Much of the panel’s investigative efforts are happening behind the scenes, supervised by Goldman. His team members are sifting through documents and open-source material, drafting document and testimony requests, and preparing for witness interviews. Goldman said he is also coordinating with other committees and briefing Schiff and other members on the status of the probe.

The panel, together with the House Financial Services Committee, has subpoenaed Deutsche Bank for financial records related to Trump. Details of the subpoena became public last month, when the president and his family sued Deutsche Bank to prevent the lender from complying with the subpoena, accusing Democrats of harassing Trump and looking for information that could damage him politically.

“We’re integrated with the committee staff, but our principal focus is on any investigations that arise from any of the oversight work,” Goldman said. “We are focused on uncovering facts. We are not in the business of a political, partisan investigation.”

To say Goldman’s career has had a diverse range would be an understatement. He studied journalism at Yale University and after college became an Olympics researcher at NBC News, where he worked on a team that gathered all of the data for the broadcast of the 2000 Olympics in Sydney. He went on to cover the 2002 and 2004 Olympics, winning three Emmys as a part of NBC’s team along the way. But another career was calling.

“I come from a family of lawyers, so it was somewhat very familiar for me,” Goldman recalled. “And at the end of the day, I made the decision that, as I thought about my longer trajectory career, I did want to do more public service.”

Goldman went to Stanford Law and eventually landed back on the East Coast, where he clerked for an appeals court judge before landing the job of assistant U.S. attorney in the Southern District in 2007.

Goldman’s former colleagues describe him as a thorough and creative investigator and prosecutor, someone particularly suited to conduct “follow the money” investigations.

“He’s good at taking massive amounts of information and being able to see the forest through the trees,” Mimi Rocah, a former assistant U.S. attorney who was Goldman’s supervisor in Manhattan, said in a phone call. “In investigations, that can be the most important thing.”

In a brief interview, Schiff cheered Goldman as a “tremendous addition” to his panel.

“He combines that rare skillset of both being a very good lawyer and a very good communicator, and I think has helped the committee enormously in terms of organizing our oversight and investigative work,” Schiff said.

Goldman spent time as a legal analyst at MSNBC and a fellow at the liberal Brennan Center for Justice before joining the Intelligence Committee.

His latest job has not come without sacrifice: Goldman, who has five children, commutes to D.C. each week from New York, where his wife Corinne lives full time with their kids.

“My five-year plan is to once again live with my family,” Goldman quipped when asked about what’s next for him.

“I don’t have a plan, I really don’t. I will say, when I left the U.S. attorney’s office at the end of 2017, I left without having any idea of what I was going to do,” he recalled.  “I’ve learned from that experience that there’s no point in predicting or pursuing a particular goal, because I’ll just see where things go.”

Thanks to Morgan Chalfant.


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