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Tuesday, January 28, 2014 4:10 PM

Tactical Rabbit, Money Laundering, and Outright Criminal Activity by Major Banks

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An interesting Video Interview With Whistleblower Everett Stern just came my way.

In case you don't recognize the name, Stern disclosed the money laundering activities of HSBC, for which the bank was fined $1.9 billion. Chump change says Stern, who claims he was placed in the fraud detection unit (along with everyone else) precisely because they knew nothing about money laundering.

So how did Stern catch the activity? He read a couple of books and a few weeks later discovered money laundering activity, lots of it.

Moreover, Stern had proof it was purposeful, organized fraud as opposed to transactions just slipping through the cracks.

Partial Transcript

Here is a key snip of the transcript and interview of Everett Stern by Sophie Shevardnadze.

SS: But, technically, how did you detect it technically? How does it happen? How did you detect suspicious transaction that could be linked to terrorism or drug cartels?

ES: It was so obvious. It’s because I have two brain cells in my brain and can do simple internet Google searches. This was not rocket science. For instance OFEC has a list of companies that the US cannot do business with, an OFEC sanction list, and so, for instance, Caribe Supermarkets, Tajco, the Tajideen Brothers, which were all linked to Hezbollah. Caribe Supermarkets is a supermarket chain based out in Gambia, and they are owned by Tajco, which is owned by Tajideen Brothers, which are based out in Beirut, and are financiers of Hezbollah. There were transactions going through HSBC and I saw it.

ES: What’s interesting is that it’s not that it was hard to find the transactions, it was very easy. The real disturbing part is how they were doing it because these transactions, that were supposed to be stopped in the wire filter, were actually going through. They were going through because what HSBC employees were doing was adding dots and dashes and different numeric codings to the actual payments. The FBI later called it “stripping the payments”. So the computer system…there wasn’t a match with the transactions and they would go through. It was just blatantly obvious what they were doing, it just took me I guess just little extra effort to see how they were criminally allowing the terrorist funds to go through.

Mish Comment: No one went to jail over this. I am not even aware that anyone was criminally charged. Here is another snip to consider. Subsequent emphasis in italics is mine.

SS: If we abstract from the HSBC case, who is ultimately in charge of preventing money laundering in the US? Are they doing their job or does it have to be individuals like you who would actually step up?

ES: The Department of Justice is not doing their job. Eric Holder specifically said during Senate hearings that prosecuting these banks criminally could cause a financial crisis. My argument to Eric Holder is that if we allow this terrorist financing to continue, and then the next 9/11 gets financed, I guarantee the next 9/11 will cause a financial crisis. What’s happening now is that these bankers and management of large banks such as JP Morgan, HSBC – they’re not being criminally accountable, so they can do whatever they want and they’ll just be fined. HSBC was fined $1.9 billion, which seems like a lot of money, but that’s actually only five weeks’ profit for them and their stock actually went up when the announcement came out. It’s really disgusting that the Department of Justice is not doing their job. If I were to donate $1 to Hamas or Hezbollah I would go to jail for life, and yet they’re donating billions and that’s okay. It doesn’t make any sense.

SS: You’re saying that no one was held responsible or criminally charged, the FBI and the CIA didn’t really follow up this case that you presented to them, governments are afraid to criminally prosecute banks like HSBC because of reasons linked to economic crisis – so could it be that they are complicit?

ES: Yeah. Believe me, I’m banging my head against the wall with this one. I have risked everything and tried my hardest to get these people in jail. Right now the former managers that were my bosses who were subsequently fired from HSBC are now the heads. One of them is the head of compliance for TD bank, the other one is the head for the Chinese bank. There’s no consequence there, these people are still doing the same thing in multiple organizations and that’s not what America is about and that’s not what justice is about.  

SS: So it seems like a country that’s fighting a War on Terror is also financing it at the same time.

ES: Yes.

SS: I’ve read that this whole case with HSBC left you emotionally drained, financially devastated. How are you now? How are you doing?

ES: I’m doing great; I’ve started my own company, Tactical Rabbit, which is an intelligence company. We became profitable five months ago, but it was extremely hard. I was working at PF Chang’s restaurant as a waiter after I left HSBC, because I had no money, I had nothing left, and I literately walked into PF Chang’s with the Rolling Stone article when I was featured in Rolling Stone, and I said to them “Look, I’m a whistleblower and I can’t get work. I need a job, I never waited tables before. I’ll do a good job for you guys,” and they hired me. They said “Look, we’ll give you a chance,” and I took all of that PF Chang’s money and I put it into Tactical Rabbit and that’s how I launched this very, very successful company now. We’re going to be a multimillion dollar company.

Mish Thoughts

Congratulations to Everett Stern who ought to sue HSBC and the justice department as well for his share of the money laundering fine collected.

More importantly, the justice department ought to start criminal prosecution of anyone adding dots and dashes i.e. “stripping the payments”.

How high up would this go if those at the bottom of the rung were given reduced sentences for implicating those above them? I suspect nearly to the top, if not the top.

Mike "Mish" Shedlock

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