As First Published in the May, 1999
Former Bush Assistant Secretary
for HUD Reveals "Ethnic Cleansing"
Connected to CIA Drug Dealing in
Government Spends Millions in Campaign
to Silence Former Wall Street Banker, Cover Up Connections
to Dark Alliance Stories & CIA Inspector General Report
on Drug Trafficking
Special to From The Wilderness
Contributing Editor, Catherine Austin Fitts
I was ten years old when the combined
action of HUD housing investment and heroin trafficking
destroyed my West Philadelphia neighborhood. The combined
real estate and drug play destroyed the equity in our homes
and businesses. Many of us left. Those who stayed were embroiled
in the increasing stress of what happens as neighborhoods
deteriorate into crime and decay. I decided that I would
learn how money worked. I was too young to understand fully
how the combination of HUD investment and drugs could move
control and ownership from the many people who lived in
a community to a few people who lived outside the community.
* * *
I'm an investment banker. In the eighties
I was a Managing Director and member of the Board of Directors
at the Wall Street investment bank Dillon, Read & Co.,
Inc. I managed the firm's large municipal and government
clients. My projects included the financing of billions
of dollars of improvements in New York City's subway, bus
and commuter rail systems. I also organized the financing
for hundreds of millions in renovations to the infrastructures
of New York and New Jersey. I regularly handled hundreds
of millions of dollars in transactions.
I also helped to make tens of millions of dollars in profits
for my firm and I raised tens of thousands of dollars for
the George Bush Presidential campaign in 1988. Nicholas
Brady, who became George Bush's Treasury Secretary, had
been my partner and boss at Dillon Read.
I was a Wall Street insider and a political insider - or
so I thought. I was successful at Dillon Read because I
created new investment models that helped ordinary people
while making a profit. I thought "outside the box."
When Iran-Contra came and went I was oblivious. I had no
idea about the drugs. It never entered my mind. Yet today
I am convinced that the illegal drug trade, the enormous
cheap capital it generates, and the CIA's role as enforcer/protector
for the profits of that trade is a dominant factor in the
economy of this country. It is a factor, which is destroying
the entire American culture and is utterly out of control.
As an investor and banker and as a former Cabinet level
appointee, I tell you this is true.
My evolution came slowly. In 1989 I was named Assistant
Secretary of Housing-FHA Commissioner under Housing and
Urban Development Secretary Jack Kemp. I managed $300
billion of mortgage insurance, mortgages and properties
of the Federal Housing Administration and, as Commissioner,
I advised the Secretary on another $1 trillion of mortgage
financing. I was fired by Jack Kemp in late 1990 because
I would not go along with the questionable political practices,
which seem to be built into HUD's machinery and purpose.
But still I did not see the bigger picture.
In 1990, after leaving HUD, I started my own investment
company, The Hamilton Securities Group, and I devised new
and creative ways to save taxpayers billions of dollars.
In 1993, Hamilton secured contracts with HUD through Secretary
Henry Cisneros. Hamilton saved taxpayers billions of dollars
by taking defaulted HUD housing mortgages, repackaging them
and auctioning them on the private market. Hamilton began
putting wealth back into inner city projects by hiring women
living in HUD housing and teaching them how to use computers
to build data bases on how money works in 63,000 neighborhoods
throughout America. Hamilton started a data processing company
with these women in a HUD project (Edgewood Terrace) in
Washington. The women who lived there earned stock in the
company. The company made money and proved the concept of
what on-line access in communities could do to build jobs
and businesses. We used the success of that effort
to persuade HUD to fund computer learning centers in other
housing projects. Hamilton was extremely successful. We
made millions and we saved the government billions.
Fulfilling my childhood dream, Hamilton also created new
software and money management tools, which were, for the
first time ever, able to map down to the neighborhood, exactly
how HUD and other federal money worked, who profited when
loans defaulted, and how money came into or left a community.
For example, we were often able to see where HUD was spending
$100-250,000 per unit on apartment buildings when there
was single family housing available within walking distance
Secretary Cisneros had been extremely supportive of our
work. We had unrestricted access to rich quantities of government
financial data that was supposedly public but hard to understand.
We were translating that into useable information so that
people in any community could see how the money flowed through
their neighborhood. We helped HUD get increasing amounts
of data up on its web site. An unforeseen side effect for
the women at Edgewood, and for Hamilton, was that by seeing
clearly how the clean money worked, we also began to see
how the dirty money worked.
As an investor for more than twenty years, I believed that
it was actually more profitable for people to own their
own neighborhoods and businesses and to know exactly how
the money worked. The MONEY MAPS we made were so simple
to understand that they looked like comic books.
As it turns out we mapped a great deal more than we knew.
In 1996, as reporter Gary Webb was busy writing a series
of stories connecting CIA and the Contras to the crack cocaine
epidemic in Los Angeles, I was busy using the money maps
in a way that would help people move people from government
subsidies to home ownership and entrepreneurship.
I was also advocating that U.S. government investment in
communities should be subject to the same public disclosure
rules that private companies are obligated to follow under
the Securities and Exchange Commission Rules. If you are
a shareholder in a company, that company is using your money.
The law requires that they use your money legally and that
they do their best to protect your money and make you more.
To earn money, and to do so in a fair, honest and competitive
way, federal and state laws require companies to report
performance and key transactions to you, the shareholder.
Every citizen is a shareholder in the government. If governments
worked like they require corporations to work, they would
be required to report to you, in the sunshine, exactly how
the money was working, in your neighborhood, and you could
either approve - or disapprove of the fairness and effectiveness
of that, based upon your understanding of your own needs.
That is very threatening to those who have used agencies
like HUD as a trough to pay off political cronies.
On August 1, 1996, I gave the keynote address at a Neighborhood
Networks conference in Boston, Massachusetts to 500
owners, managers and tenants in private HUD housing.
As part of the speech I showed a slide of one of our money
maps of Los Angeles. As I put the slide up I made the following
"One of the products that has been most successful for
the first data servicing sites, Edgewood Technology Services,
has been "geo-coding" databases and mapping. I
wanted to show you this map; it's up on the World Wide Web.
This is a map of Los Angeles. Can anyone figure out where
south central LA is from looking at where the HUD properties
are on this map? This is the same thing as the Washington
DC map I showed earlier. The little red dots are single
family properties that were financed by (now) defaulted
HUD-held mortgages. This map was geo-coded and designed
and programmed by a woman who, four months before, had been
on unemployment compensation and is a tenant in HUD housing"
If you compare this map with the fact that Freeway Ricky
Ross - the crack cocaine kingpin described in Gary Webb's
Alliance was known for buying up real estate along
the Harbor Freeway and selling drugs throughout this exact
area - the mathematical correlation is staggering. Every
dot represents a HUD mortgage where the taxpayers lost money
in a defaulted FHA loan and where somebody else bought the
property for pennies on the dollar. Most of those loans
defaulted as the crack cocaine epidemic ravaged Los Angeles.
The taxpayers bear the costs of not only the defaulted mortgages,
but also deterioration in property value, the crime, and
ultimately the depopulation due to very expensive prison
warehousing and welfare.
Exactly who bought and traded in properties throughout this
area should be the subject of congressional hearings looking
into corrupt HUD practices from the period and continuing
to this day. I suspect that many of the same players connected
to the Savings and Loan scandals, who have also been tied
to Iran-Contra and CIA's drugs will surface yet again. Demographically
it is also easy to see now that the racial composition of
South Central has changed radically and that African-Americans
have been geographically and politically fragmented as,
I believe, an intended result. Their political power has
Just days after showing this first map, I received a subpoena
from the Office of the Inspector General of HUD asking for
extensive data and records from Hamilton. Suddenly, the
loan sales and Hamilton were under investigation. The HUD
IGÕs actions were doubly surprising given their intimate
involvement in and positive feedback about the loan sales
program and because a HUD OIG audit team had just finished
an audit of the loan sales program and had informed our
project manager and HUD that our performance was excellent
and there were no problems whatsoever.
At the same time, we got calls from a team of reporters
from US News & World Report. They had been assured "at
the highest levels" of the HUD Inspector GeneralÕs office
that we were guilty of criminal action and that I and would
soon be indicted. The recent favorable audit disappeared.
Investigators started doing interviews where they did more
seed planting than information gathering.
The "investigators" at HUD started suggesting
to reporters that bid rigging had occurred in the loan sales.
This was just after members of the HUD IG audit team had
actually sat in on one sale, and concluded that bid rigging
was impossible. They had also concluded that there was no
way that "rigging" could have taken place because
in a sealed-bid auction, you cannot favor one bidder when
all bidders have access to the same information. That audit
report was suppressed while the IG investigators pushed
the exact opposite notion to reporters.
On August 10, Bob Dole announced Jack Kemp as his running
mate. Meantime, the Republican appropriations committee,
chaired by Republican Congressman Jerry Lewis of San Bernardino,
gave Susan Gaffney, the HUD IG a large appropriations increase
for her program Operation Safe Home, which targeted black
communities for visible media "wag-the-dog" roundups of
drug offenders. At the same time, our model for computer
learning and data processing by people who had a stake in
the company that did the work was adopted by Unicorp. Unicorp
is the Department of Justice private business that markets
prison labor to federal agencies.
Suddenly, the black people who were apparently not smart
enough to do database and software development near their
children and parents were more than competent enough to
do it in prison. The prison investment boom was taking off,
new and longer mandated sentences. We at Hamilton felt like
we were walking around with a big bullseye on our back because
we wanted the communities of America to know what we knew,
which was how to make maps that tracked the money flow in
their own home towns.
I was not the only one dealing with Inspector General inquiries.
The HUD officials working with me were also inundated with
an investigation marked by leaks and dirty tactics. The
former Deputy Assistant Secretary for Multifamily at HUD,
Helen Dunlap, was one of the people targeted. She was from
California and had previously run the California Housing
Partnership. She had lots of experience in real estate and
community development in Los Angeles. Gary Squier, the Housing
Commissioner of LA, on loan from Los Angeles, who was not
involved in mortgage sales with Hamilton, nonetheless found
himself dealing with similar probes from the HUD OIG. He
was later to be turned down for a position by the White
House despite impeccable credentials. No one could figure
Suddenly I was persona non grata to long time friends and
business relations in and around the government. I believe
the leak campaign was far more sophisticated than something
the HUD Inspector General could or would do on her own.
It appeared that major economic and political powers had
ordered that Hamilton be destroyed. More importantly, they
wanted the evidence of what we knew - the maps - destroyed.
That is also why, to this day, we believe the Federal government
has destroyed many, but not all, of our tools and databases.
We didn't realize it at the time, but I am now convinced
that in the summer of 1996, our software and mapping techniques
uncovered evidence of ethnic cleansing on Los Angeles. Hamilton's
map revealed that one of the most significant effects of
the crack cocaine epidemic was that black homeowners, faced
with payments on unlivable and unsellable properties, simply
defaulted and fled the city to get away from the shootings
and the drugs. Those properties: industrial, residential
and commercial were scooped up for pennies on the dollar.
Wouldn't it be fascinating to know who bought the properties
and how much money has been made on them since?
Thanks to people like Gary Webb, Peter Dale Scott (Cocaine
Politics), Alex Cockburn (Whiteout), Mike Ruppert,
brave DEA Agents like Celerino Castillo - and now to the CIA's
own reports - we can prove that the CIA knew full well
what it was doing. And, as is his particular gift, Mike Ruppert,
who gives us permission to see the obvious, has established
that blacks were targeted by CIA and that the people who control
our intelligence agencies are the same ones who control our
economy and Wall Street. Mike has taken great pains to document
these things in previous issues of From The Wilderness.
ETHNIC CLEANSING IN LOS ANGELES
Ethnic cleansing is a bit trickier in
South Central Los Angeles than it is in South Central Europe.
It is essential in a "democracy" to have people do it in
a way that makes it look like they're "doing it"
to themselves. You need a socially induced suicide.
So how do you get people to commit suicide? You make it
very attractive for their children to make money doing something
illegal. Then you arrest them for it in a very visible way
(Remember the battering rams and armored cars?). You
design stories to make people blame themselves for what
has happened. This is how branding works. Pepsi = tastes
good, Black people = cause illegal drugs and crime.
Support all this by a national media owned by defense contractors
and other corporate interests. That way the nightly
news has lots of moneymaking incentives to cover HUD OIG
sponsored drug raids in black communities rather than doing
a story on CIA drug trafficking.
The most efficient ethnic cleansing is self-financed or,
better yet, profitable. Drugs and alcohol are excellent
tools toward this end, especially when they are combined
with easy access to guns. Sell large amounts of addictive
substances to a group of people in an area you want to take
over, then use the cash flow to buy up their homes and commercial
real estate for 10 cents on the dollar, without much competition,
while you enjoy the full value of their cash flow. You can
then afford the long holding period required to make the
land profitable again after the cleansing period is over.
I believe that if the Federal government would make citizens'
data (and it is our data) available, instead of trying to
suppress it, it would prove that taxpayers are losing money
to fund ethnic cleansing while the people in South Central
LA are losing their lives. And I believe that it was
the effectiveness of our maps which threatened to expose
the deeper financial agendas of the eighties. I believe
our current model, the Solari Investment Model, (www.solarivillage.com)
which I am still developing, may well tie Iran-Contra, The
Savings and Loan Scandals and the HUD scandals of the late
1980s into one big economic package designed to benefit
a very few. The way to start to do this is to look closely
at all the government investment, credit and regulations
in Los Angeles since 1980.
Our maps suggest to me and others that the crack cocaine epidemic,
created by the CIA was, I believe, just as much a program
of ethnic cleansing and land grabbing economic warfare as
it was about a bunch of rebels in Central America who were
not the equivalent of our Founding Fathers. But this
kind of ethnic cleansing was hard to contain and it spread
to other races and classes. It reached the rural and suburban
neighborhoods of places like Iowa, Ohio and Tennessee. By
the end of the 1980Õs it had reached all my friends and relatives
who listen to Rush Limbaugh, voted for George Bush and donated
money to Oliver North - not knowing that, according to CIA's
own reports, the networks he controlled were the key to the
supply of drugs flowing to their kids and communities.
As Michael Ventura once wrote, "We all live in the South Bronx
now." White families all across America were hurt by drugs
and violence and their pocketbooks also got drained, even
as the media reinforced the notion that drugs were a black
MAP SHOWN BY C.A. FITTS AT BOSTON
HUD CONFERENCE - 8/1/96
© Copyright 1999. From The Wilderness
<click image to enlarge>
MOST OF THESE HUD/FHA SINGLE FAMILY
LOANS DEFAULTED BETWEEN 1982 AND 1990.
THE HARBOR FREEWAY, WHICH GAVE "Freeway" RICKY
ROSS HIS NAME, IS THE VERTICAL LINE RUNNING STRAIGHT THROUGH
THE CENTER OF THE MARKS COVERING SOUTH CENTRAL
After the 1996 election, Secretary Cisneros
was asked to resign from HUD. The choice of Cisneros' successor
seemed strange and somehow connected to Hamilton's predicament.
The Afro-American mayor of Seattle was widely considered
to be a shoe-in. After the White House floated his name,
another investigation by the HUD OIG into possible misuse
of HUD monies in Seattle caused him to be dropped. Two days
later we were assured that an Afro-American woman from Los
Angeles, Yvonne Braithwaite-Burke, was the PresidentÕs leading
candidate. Then suddenly, she disappeared from the radar
screen and Andrew Cuomo was announced with surprisingly
strong bipartisan support for someone with such a partisan
Cuomo moved into the SecretaryÕs office at HUD from his
then current position as Assistant Secretary for Community
Development and Planning. Rumors started to float around
HUD networks about minorities and people sympathetic to
minorities being moved out. Meantime, the new Secretary
made it clear that his top priority was enforcement and
it appeared that the Secretary and the OIG were going to
compete for an ever-growing budget via media-worthy enforcement
actions. So, then came the Urban Fraud Initiative and increased
funding for Operation Safe Home, targeting tenants, real
estate owners and managers in black communities. At the
time, we made no connection between these actions and the
promotion of prison privatization by Vice President GoreÕs
National Performance Review. New Federal sentencing guidelines
helped increase black inmates to approximately 50% of a
rapidly expanding prison population. All this at an extraordinary
cost to taxpayers.
As the audits of Hamilton continued, forcing us to spend
hundreds of thousands on legal fees, Secretary Cuomo and
the Inspector GeneralÕs staff, who were later to withhold
$2 million in payments, became obsessed with seizing our
data and software. This was software we were planning
on giving away via the web! The critical issue from October
1997 through the following March seemed to be - our knowledge!
In October, great emphasis was placed on our returning all
of our HUD databases, including those that were supposed
to be publicly available, and certifying that we had done
so. In the following months, the HUD OIG tried to seize
all of our documents, including originals, with no basis
in law. After demanding physical access to our computers,
government employees made back-ups of our data which, whether
intentionally or not, seriously damaged it.
And no one has yet officially accused us of any wrongdoing.
We were, and are to this day, only being investigated. It
is clear to us that the intent of this campaign was to drive
the company into bankruptcy. The leak campaign against the
company and me has since reached new heights of absurdity.
As the HUD IG keeps assuring the media that that I am guilty
of criminal violations they now have investigators focusing
on my sex life! Worse still, HUD IG agents recently
showed up at the home of my 72 year old uncle with a subpoena
for records of a family owned farm house that doesn't even
have indoor plumbing, implying some kind of fraudulent transaction.
Members of my family have reduced or cut off communications,
fearing they could be targeted too.
After court battles and negotiation, in March of 1998 HUD
insisted that all of our computers be scrubbed. We were
not going to be allowed to transfer our own proprietary
data and the Federal District Court Judge, Stanley Sporkin,
appointed a Special Master as trustee to manage all our
digital and paper records. Inexplicably, HUD was quite upset
when they found we had taken our main server with us and
not sold it, in spite of the government's destruction of
its files. The HUD investigator made it clear that we could
not keep the server because - "We were not allowed to have
any of the knowledge". We could not explain this bizarre
position and neither could they.
What I did not know until approximately a year later, after
reviewing tapes of Mike Ruppert's lectures, was that hearings
were held on Volume I of the CIA Inspector GeneralÕs report
on the Dark Alliance allegations on March 16 of 1998. At
the same moment the government was trying to steal Hamilton's
data and knowledge.
We also did not notice in February when Vice President Al
Gore announced that Secretary Cuomo was bestowing an empowerment
zone and $300 million in tax credits on Maxine
WaterÕs congressional district. That was just
before the March 16th hearing where Maxine Waters
performed brilliantly against CIA in a show that nobody
watched. We were busy, at the time, moving our computers
over to our law firm to protect the MONEY MAPS from a series
of break-ins and other harassment around my home.
Our growing fear of being set up in an asset forfeiture
case, after the Department of Justice threatened my assets
personally, dominated our lives and does so to this day.
And so we did not notice when the damning Volume II of the
CIA Inspector General's report was released on October 8th,
one hour after Henry Hyde's Committee started the Impeachment
inquiry. And we did not notice that Maxine Waters'
voice suddenly fell almost silent as Bill Clinton saved
his presidency by blackmailing the Republicans with Volume
II and its contents. I made efforts to communicate with
Maxine Waters in November and December 1998 about possible
connections between our case and CIA drug dealing but, aside
from an initial contact, our calls were not returned. [FTW
placed telephone and e-mail requests to both the LA and
Washington offices of Maxine Waters to ascertain whether
the $300 million tax credit award in March, 1998 was spontaneous
or the result of a previously submitted request. As of press
time we have received no response. - ED]
To date we estimate that the HUD Inspector General investigation
targeting my companies and me has cost the American taxpayer
$35MM. To date we have not been successful in getting the
Department of Justice or the HUD OIG to tell us what they
are investigating or even who is in charge of the investigation.
The investigation continues with no end in site. We have
multiple lawsuits filed against HUD and are filing more.
We continually hear Judge Stanley Sporkin, rule against
us with statements that he disagrees with the law so we
should take it up with Congress.
The company I founded, Hamilton, was liquidated a year ago
to pay the bills of the ongoing campaign to discredit us.
As a result of the persecution we have lost more than one
hundred million dollars. I have sold my home, lost millions
of dollars in unpaid HUD contracts, endured eighteen audits,
burglaries, physical harassment and an unending smear campaign
which has produced not a single complaint or indictment
after almost three years. I believe this is because I have
the pieces to help prove that what Gary Webb stumbled upon
was ethnic cleansing - American style.
My bottom-line? For those of you pushing for testimony on
Volume II, letÕs try another tactic. LetÕs push for a Congressional
and GAO investigation on how all the federal investment,
credit and regulation worked in Los Angeles from 1980 to
1994. LetÕs look at how our government was used, from CIA
to DEA to HUD, to destroy and loot our communities. The
key is HUD. LetÕs look at how the Section 8 owners, managers
and tax partnership beneficiaries worked along side the
drug traffickers. LetÕs look for patterns of loan brokering,
money laundering, cleansing and other relationships between
real estate, land, prison growth and privatization and the
kind of investors who control CIA and intelligence networks.
Then letÕs look how this ties in to campaign fundraising.
The present economic and political system is not sustainable
and must collapse - or change. New investment models in
the information age will show us that integrity, honesty
and win-win investment models, rooted in community and place
based autonomy are actually more profitable than the liquidate
and destroy models currently operating. Like the auto mechanic
to the car owner who needed repairs, "You can either
pay some now - or pay a lot more later." But
we have to solve some problems first. Finding the will to
do that is made easier for me as I recall the words of Bishop
Alfred Owens of the Greater Mount Calvary Holy Church, "If
we can face it. God can fix it."
After a lifetime of study, from Wharton to the inner sancta
of government, I believe I have found the solution to a
very real corruption which neither Congress nor Wall Street
presently possess the ability to stop. It is a new investment
model, born of the Information Age, which will save both
the just and the unjust alike by turning the current Industrial
Age investment model upside down and making what was once
secret - available to all. As the edge of the precipice
approaches and as our economic snake eats its own tail it
shouldn't be long before those who have scoffed at the truth-tellers
recognize that we are the ones with the maps to lead them
out of the jungle.
You can learn more about the Solari investment model by
Catherine Austin Fitts, is a 1978
Graduate of the Wharton School of Business with an MBA in
Finance. From1978 to 1989, at the Wall Street investment
bank Dillon, Read & Co she served in the Corporate Finance,
Energy Finance, Mergers and Acquisitions and Public Finance
Departments. From 1986-9 Fitts was a Managing Director and
member of the Board of Directors.
From 1989-90 Fitts served as Assistant Secretary of Housing
- Federal Housing Commissioner at the Department of Housing
and Urban Development. From 1991-7 she served as President/CEO
of the Hamilton Securities Group with aggregate revenues
of $50 million, an employee base of 50 and portfolio strategy
responsibilities for $400 billion of financial assets.
She is now President and CEO of Solari, Inc; a Washington
consulting firm specializing in equity based neighborhood
investment models for the Information Age.
If you want to
know MORE about this subject,
may we recommend the following:
- The CIA Drug Economy and The Way Out
- The Aztlan Tape
- The Salon at Fraser Court
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