Fraud Investigator Accuses General Electric of Hiding $38-Billion in Liabilities. GE Says the Accusation Is A Fraud to Game Stock Prices
Chief Executive Officer Larry Culp said Markopolos’ 175-page report contained factual errors and constituted “market manipulation – pure and simple,” because Markopolos stood to profit from short-selling tied to its release.
Short sales, or bets that a share price will fall, have risen 17% in GE stock over the past month to 110 million shares worth about $995 million before the report came out Thursday, said Matthew Unterman, a director at S3 Partners, a financial analytics firm in New York.
In the report www.gefraud.com, Markopolos accused GE of hiding $38 billion in potential losses and asserted that the company’s cash and debt positions were far worse than it had disclosed.
“GE’s true debt to equity ratio is 17:1, not 3:1, which will undermine its credit status,” Markopolos said.
The report also says GE is insolvent and asserts that its industrial units have a working capital deficit of $20 billion.
“He is selectively front-running widely reported regulatory processes and rigorous investigations without the benefit of any access to GE’s books and records,” GE board member and audit committee chair Leslie Seidman said in a statement, referring to Markopolos.
While investors sent GE shares sharply lower, the report echoes the assertions of some of Wall Street’s more skeptical analysts, who have long raised alarms about GE’s low cash flow, frequent accounting charges and writedowns, and what they describe as opaque financial reports.
Culp, the first outside leader of the company who took over in October, has made no secret of its woes.
The industrial businesses have seen a $2.2 billion cash outflow so far this year, and Culp said last month that GE may incur cash costs of $1.4 billion this year from the grounding of Boeing Co’s (BA.N) 737 MAX jetliner. GE makes engines for the jet through a joint venture with Safran SA (SAF.PA) of France.
The report alleges that GE faces $38 billion in future expenses that it has not disclosed. “GE’s $38 billion in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds,” the report says.
In a statement GE said, “We remain focused on running our business every day and … will not be distracted by this type of meritless, misguided and self-serving speculation.”
GE said it “stands behind its financials” and operates to the “highest-level of integrity” in its financial reporting.
It also said Markopolos was known to work for unnamed hedge funds that typically benefit from short-selling a company’s stock.
Marianne Williamson Releases $500 Billion Reparations Plan for Descendants of African Slaves in the US
Spiritual guru and 2020 White House hopeful Marianne Williamson on Wednesday released her plan to pay between $200 billion to $500 billion in reparations to descendants of African slaves in the United States.
The proposal calls for the creation of a “Reparations Commission” to
allocate funds to infrastructure and education initiatives in black
neighborhoods. According to Williamson’s campaign, the commission would
be run by 50 descendants of slaves with a “scholarly, cultural, or
political connection to the issue of reparations.”
“The Reparations Plan will not erase the history of slavery in
America, nor of its ugly aftermath. It is obviously only one part of a
multi-dimensional healing process,” Williamson said in a statement. “But
it will go far toward ending a painful, horrific chapter in American
history, and will give future generations of Americans a chance to begin
again on a ground of genuine reconciliation.”
Williamson’s proposal references the “40 acres and a mule” broken
pledge made to slaves during the Reconstruction as the driving motive
behind her reparations plan.
“We have not yet fully done all that it is morally incumbent upon us
to do in order to heal this ugly wound,” the new age author said.
AOC’s Chief of Staff, Saikat Chakrabarti, Has Come under Investigation for Possible Illegal Handling of more than $1-million in Campaign Donations – And He Has Resigned
The feds are looking into possible campaign finance misdeeds by Rep.
Alexandria Ocasio-Cortez’s chief of staff and lead rainmaker, who
suddenly resigned Friday, federal sources told The Post.
The inquiry centers on two political action committees founded by
Saikat Chakrabarti, the top aide who quit along with Ocasio-Cortez
spokesman Corbin Trent, the sources said. Trent left to join the
congresswoman’s 2020 re-election campaign.
The brash Chakrabarti, who masterminded Ocasio-Cortez’s campaign and
steered her proposed Green New Deal, had caused uproar in the halls of
Congress with a series of combative tweets that contributed to a rift between his rookie boss and House Speaker Nancy Pelosi.
“People were not happy that he used his Twitter account to comment
about members and the bills that he and his boss oppose,” a senior House
Democratic staffer said. “There was a series of colliding and cascading
The two PACs being probed, Brand New Congress and Justice Democrats,
were both set up by Chakrabarti to support progressive candidates across
But they funneled more than $1 million
in political donations into two private companies that Chakrabarti also
incorporated and controlled, according to Federal Election Commission
filings and a complaint filed in March with the regulatory agency.
In 2016 and 2017, the PACs raised about $3.3 million, mostly from
small donors. A third of the cash was transferred to two private
companies whose names are similar to one of the PACs — Brand New
Congress LLC and Brand New Campaign LLC — federal campaign filings show.
Judge Orders Oberlin College to Post $36-Million Bond Because It Refuses to Pay Defamed Bakery
College has suggested it can’t pay judgment plus interest
Oberlin College refuses to take responsibility for its own
administrators’ defaming and retaliating against a bakery whose
race-neutral anti-shoplifting policy enraged Oberlin students.
Judge John Miraldi ordered the Ohio liberal arts college to post a bond
of more than $36 million to cover the judgment plus interest while
Oberlin appeals. Without explaining his reasoning, he approved the exact
amount the Gibson’s Bakery plaintiffs had asked Oberlin to pay in lieu
of letting them collect on the judgment immediately.
The bond will remain in place until Aug. 19, though it will be
extended until Sept. 9 if the college “timely” files its post-trial
motions on or before Aug. 19, Miraldi wrote. He’ll rule on its motions
by Sept. 9.
According to Legal Insurrection, which closely covered the trial and subsequent legal wrangling, the bond includes three years of interest.
Philadelphia: US Authorities Seize 20 Tons Of Cocaine Worth $1.3 Billion From Ship Owned By the JP Morgan Bank
Topline: In one of the largest drug busts in U.S. history, federal authorities in Philadelphia seized nearly 20 tons of cocaine—worth about $1 billion— last month from a ship owned by JP Morgan’s asset management arm.
- 19.76 tons of cocaine (that’s an estimated street value of $1.3 billion, according toBusiness Insider) were seized from the ship when it arrived at Packer Marine Terminal in Philadelphia on June 17.
- The ship, named MSC Gayane,
is operated by Switzerland-based Mediterranean Shipping Company, but it
was financed by a transportation strategy fund run by JP Morgan’s asset
management arm. The ship is leased out to MSC.
- Six crew members aboard MSC Gayane
have been arrested and charged with knowingly and intentionally
conspiring to possess more than five kilograms of cocaine, the Justice
Department said in a statement.
- The ship was flying under the flag of Liberia, a country in West Africa, according to online vessel tracking website MarineTraffic.
JP Morgan declined to comment.
Attorney William McSwain said in a tweet that the sheer amount of
cocaine could have killed “millions” of people. A federal criminal
investigation into the alleged smuggling operating is ongoing.
is one of the largest drug seizures in United States history. This
amount of cocaine could kill millions—MILLIONS—of people. My Office is
committed to keeping our borders secure and streets safe from deadly
narcotics,” the tweet reads.
Kamala Harris Proposes $100 Billion Grant to Help Black Families Become Home Owners
Taking aim at the racial wealth gap in the U.S., Democratic
presidential candidate Kamala Harris proposed a $100 billion program to
help black families and individuals buy homes.
at the Essence Festival in New Orleans on Saturday, Harris said the
program would help with down payments and other costs associated with
The program, she estimated, would help 4 million families who
live or rent in historically red-lined areas, or those where loans are
often refused because borrowers are seen as poor financial risks.
“We must right the wrong, and after generations of
discrimination give black families a real shot at home-ownership —
historically one of the most powerful drivers of wealth,” Harris said.
program, which would be administrated by the Department of Housing and
Urban Development, would give grants of up to $25,000 to families with
incomes of up to $100,000, or as much as $125,000 in high-income
communities. Harris said the plan would, over time, reduce the wealth
gap between black and white families by one-third.
Computer Hackers Target Cities with Outdated Infrastructure for Bribe Payments After Shutting Down Systems
Cyber-criminals have struck for the second week in a row, this time on a small Florida city called Lake City, according to the WSJ.
The city has agreed to pay ransom to the tune of hundreds of thousands
of dollars after a ransomware attack crippled its systems.
Lake City’s council approved the measure during an emergency meeting
Monday night and will be paying about $462,000 via Bitcoin, by way of
the city’s insurer. This payment follows a similar incident in Riviera
Beach, a city of 34,000 near West Palm Beach, where the city’s council
authorized a similar $600,000 ransom payment.
The event [in Lake City] began June 10 with what the city described
as a “triple threat” malware attack, then escalated with a ransom demand
last week, the city said in a news release. The attack knocked out
email and hindered city services, and people had to temporarily pay
utility bills on terminals at the police station, the city manager said.
The attack included a ransomware variant called Ryuk that is known for
hefty ransom demands.
Emergency services weren’t affected. But Lake City authorities
worried they wouldn’t be able to access encrypted files such as
ordinances, public-record requests and utility information.
These are both signs of how increasingly sophisticated hackers are
targeting cities with outdated IT infrastructure and holding them ransom
for sizeable sums. And suceeding. The Riviera Beach ransom was about 12
times the size of a ransom demand that Atlanta refused to pay last
year. These demands are becoming more common and are growing in size.
The six figure sums averaged only a couple thousand dollars a few years
Ironically, the hacking measures appear to come thanks to a hack of
the NSA’s own weaponized hacking arsenal, which is now being used
against the US.
Larry Ponemon, whose Michigan research company, the Ponemon
Institute, focuses on information security said: “There are a lot of
copycats out there, and they figure they’re going to ride the gravy
Attackers are going after both companies and cities regularly by
exploiting vulnerabilities via malicious email attachments and demanding
payments for decryption keys.
Europe Announces New Trade Payment System, Instex, to Work Around Trump’s Sanctions Against Iran
With the world waiting for the first headlines from the Trump-Xi
meeting, the most important and unexpected news of the day hit moments
ago, when Europe announced that the special trade channel, Instex, that will allow European firms to avoid SWIFT and bypass American sanctions on Iran, is now operational.
Following a meeting between the countries who singed the Iran nuclear
deal, also known as the Joint Comprehensive Plan of Action (JCPOA),
which was ditched by US, French, British and German officials said the
trade mechanism which was proposed last summer and called Instex, is now
As a reminder, last September, in order to maintain a financial
relationship with Iran that can not be vetoed by the US, Europe unveiled
a “Special Purpose Vehicle” to bypass SWIFT. The mechanism would
facilitate transactions between European and Iranian companies, while
preventing the US from vetoing the transactions and pursuing punitive
measures on those companies and states that defied Trump. The payment
balancing system will allow companies in Europe to buy Iranian goods,
and vice-versa, without actual money-transfers between European and
The statement came after the remaining signatures of JCPOA gathered in Vienna for a meeting that Iranian ministry spokesman Abbas Mousavi called “the last chance for the remaining parties…to gather and see how they can meet their commitments towards Iran.”
Until today, Tehran was skeptical about EU’s commitment to the deal
and threatened to exceed the maximum amount of enriched uranium allowed
it by the deal after US had imposed a series of sanctions on the
Meanwhile, opponents of Instex – almost exclusively the US – have
argued that the mechanism is flawed because the Iranian institution
designated to work with Instex, the Special Trade and Finance
Instrument, has shareholders with links to entities already facing
sanctions from the U.S.
The announcement sent oil sharply lower, with crude futures falling
about $1/bbl in closing minutes before settlement, extending daily loss,
as it means Iran now has a fully functioning pathway to receive payment
for oil it exports to anyone it chooses.
Every Democrat on Stage at the Second Night of Debates Says Illegal Aliens Should Get Health Insurance. The $32 Trillion Cost for ‘Medicare for All’ Is Wildly Underestimated – Before Adding 11 Million Migrants.
Bernie Sanders is offering a lot of government services, including
“Medicare for all,” which promises to pay for everyone’s healthcare. So
when he becomes president, will he raise taxes on the middle class?
Sanders was offered up this question as a lead-off in the June 27
Democratic presidential debate. He blathered for a full minute without
answering, then he had to be asked a second time before he finally
produced an answer: “Yes, they will pay more in taxes,” he said, “but
less in healthcare.”
OK, maybe. But this answer actually raises far more questions than it answers.
The first and most uncomfortable question was raised moments later in the same debate by Colorado Sen. Michael Bennet. Bernie Sanders’ home state of Vermont, governed entirely by Democrats at the time, killed off its proposal for single-payer healthcare. Democratic Gov. Pete Shumlin signed the bill to implement the program in 2011. He also pulled the plug on the program in 2015 when he found out that it would double his state’s budget. Vermonters would have had to pay an 11.5% payroll tax, plus a 9-point increase in the state income tax.
In Colorado, voters rejected single-payer healthcare for the same reason, with 79% voting against a plan that would have more than doubled
their state budget. And in California, where Democrats have the power
to do just about any crazy thing they like, Democrats killed their own
Healthy California single-payer healthcare plan because it would have tripled their state budget.
Bank of America Cuts Business with Illegal Immigrant Holding Facilities for Illegal Immigrants and Private Prisons
Bank of America will cease lending to detention centers and private prisons, making it one of the last big Wall Street bankers to cut ties with the industry as corporations wrestle with whether to cash in on President Trump’s immigration policies or create distance amid increasing public backlash.
“The private sector is attempting to respond to public policy and government needs and demands in the absence of long standing and widely recognized reforms needed in criminal justice and immigration policies,” Bank of America said in a statement to The Washington Post. “Lacking further legal and policy clarity, and in recognition of the concerns of our employees and stakeholders in the communities we serve, it is our intention to exit these relationships.”
Dropping private prison companies is a way for banks, already targets of Democratic presidential candidates, to get out of the crossfire on another emotional issue, industry analysts have said. JPMorgan Chase and Wells Fargo made similar moves earlier this year, and U.S. Bank told The Post in March that it, too, was pulling back.
Banks have been conducting a cost-benefit analysis on whether the relatively small fees drawn from the prison industry are worth the political headache and potential reputational hit, said Ed Mills, a Washington-based policy analyst with Raymond James. The calculus changed after Democrats took control of the House in 2018, elevating Rep. Maxine Waters (D-Calif.) to the chair of the powerful Financial Services Committee where progressive lightening rod, Rep. Alexandria Ocasio-Cortez (D-N.Y.), also serves, he said. No “big bank CEO wants to go in front of Congress and have to explain why their bank is financing something politically controversial,” Mills said. “The banking fee is not worth the risk.”
The moves also come as big banks post record profits and the Trump administration rolls back regulations put in place after the global financial crisis. In 2018, Bank of America reported profit of $28.1 billion — an all-time high and 56 percent higher than the $18 billion recorded the year before. Its chief executive, Brian Moynihan, made $26.5 million last year.
Study Claims 40,000 Venezuelans Dead as a Result of US Sanctions that Have Increased Under Trump
American economic sanctions may have killed up to 40,000 people in
Venezuela between 2017 and 2018, according to a new study. The finding
only underscores the lethal realities of “soft power,” all too often
presented as a humane alternative to open armed conflict.
“There was a 31 percent increase in general mortality from 2017 to 2018,” noted the study, conducted by the Center for Economic and Policy Research (CEPR), a left-of-center think tank based in Washington.
“This would imply an increase of more than 40,000 deaths,“ the study
said, adding it was “virtually certain” the sanctions made a
“substantial contribution” to the figure. The authors said that amounted
to “collective punishment,” and violated international humanitarian
In addition to the surge in the mortality rate, the study also found
that the sanctions have helped to reduce the average Venezuelan’s
caloric intake, and driven millions to flee the country in search of
The researchers acknowledged the difficulty in precisely quantifying
the role of the sanctions in Venezuela’s dismal economy, but it’s clear
they are among the main factors preventing a recovery.
Though Venezuela’s troubles are surely caused in no small part by the government’s socialist economic policies – as well as the dramatic devaluation
of the Bolivar – the humanitarian crisis is only worsened by US
sanctions. The Obama administration maintained a limited sanctions
regime on the country, but President Trump has expanded it tenfold since
taking office – part of another so-called “maximum pressure campaign.”
As of April, more than 150
Venezuelan entities have been penalized, many linked to the country’s
industrial and financial sectors. Washington in the summer of 2017 cut off Venezuela’s access to American lenders, and more recently sanctioned its central bank.
The U.S. has sanctioned the Venezuelan Central
Bank (BCV) & Director Iliana Josefa Ruzza. This action will hinder
former Maduro regime’s use of BCV to move money in & out of #Venezuela via the U.S., stopping further theft of assets & destruction of the economy. #EstamosUnidosVE pic.twitter.com/ly4jYDu9WV
— Department of State (@StateDept) April 17, 2019
Deprived of foreign creditors and the ability to finance capital
maintenance, Venezuelan oil production has collapsed, with output
expected to fall by some 67 percent by the end of this year, according
to the CEPR study. Production capacity currently sits at one third of what it was the year Hugo Chávez took power in 1999.
Venezuela’s oil sector is a vital source of state revenue, and was
hit with several rounds of sanctions this year. In January, Washington
blocked American firms from purchasing Venezuelan oil, which alone
tanked petrol exports by 40 percent; the US was its largest market. Additional oil sanctions were applied in April, looking to disrupt shipments to Cuba.
The sanctions are set to continue to inflict pain on Venezuela’s
civilian population, who face one of the worst economies in the