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by Uri Dowbenko
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HUD Fraud, Spooks and the Slumlords of Harvard
by Uri Dowbenko
The Harvard-Bush Connection
Since historically the Chinese Opium Trade and the African Slave
Trade have provided the financial foundation for the Boston
"Bluebloods," it should come as no surprise that the Harvard Endowment
Fund and the Harvard Management Corporation are involved in what can be
characterized as shady enterprise at best -- or criminal activity at
In 1989, the Harvard Endowment Fund, became the 50% owner of HUD
subsidy (Section 8) and non-subsidy apartment buildings through its
purchase of NHP, an apartment management firm, headed by Roderick Heller
Since their plan was to do an Initial Public Offering (IPO) or a
merger for NHP, they tried to run up the value by aggressive acquisition
of more apartments, preferably with HUD issued mortgage insurance which
could be defaulted on -- with little or no consequence.
Unfortunately for Harvard, HUD had initiated its new open-disclosure
and performance-based auction under the direction of Hamilton
Securities. When the private market firms battled it out, Harvard was
outbid by GE, Goldman Sachs and Black Rock and its sour grapes
apparently turned to vengeance.
In 1996, according to Fitts, Rod Heller told her that the government
had a "moral obligation" to him and his investors (Harvard Endowment) to
renew or roll over the subsidies with them to maintain their profits.
In other words, an open auction-free marketplace was not acceptable
to the Harvard Boys, since they were operating their business of
HUD-backed corporate welfare-subsidies under what Heller claimed was "an
The HUD portfolio of distressed properties had traditionally been
managed to derive profits for private business -- like Harvard Endowment
Fund -- and not the US taxpayers. Since Harvard was used to rigging
profits through politics, not fair business practices, it started losing
income because there were less management fees and the value of its
stock started going down.
In 1991, Harvard and Heller asked Fitts to do an investment bank with
them. At the last minute, Harvard Management Company honcho Michael R.
Eisenson told her he wanted 20% of her new company's stock, and the deal
On the first large HUD loan sale, Eisenson complained to Fitts, "I
don't like this" --referring to Hamilton's use of optimization software
to auction HUD mortgages -- "because the only way we can win is by
paying more than our competitors. We prefer a bid process where we can
win by 'gaming it' because we are 'smarter.'"
For those unfamiliar with Soviet (or is it Harvard-Mob?) terminology,
"smarter" is code language for saying "we can rig it." And "gaming it"
means finding a way of manipulating the players to get control of them,
rather than using the competitive process of free market capitalism.
Eisenson was obviously quite at home with the proverbial "fix."
And who is Mike Eisenson? He was the lead investor who eventually
sold Harvard's share of NHP to the Denver-based AIMCO. His other claim
to fame is that he was on the board of directors of the infamous Harken
Energy which rigged an insider stock deal on behalf of George W. Bush --
not coincidentally a Harvard grad.
In 1986, a small company called Spectrum 7 (George W. Bush, Chairman
and CEO) was acquired by Harken Energy Corp. After Bush joined Harken,
the largest stock position and seat on its board was acquired by Harvard
Management Co. The oil and gas, real estate and private equity portion
of Harvard Endowment also acquired. Warren Buffet's position in NHP, one
of the largest owners of HUD Section 8 subsidized properties in 1989.
Then the Hamilton Securities initiated HUD loan sales were slowed
down and cancelled, and, of course, Harvard's capital gains were ensured
through an IPO of NHP and through a sale to AIMCO.
The Harken Board gave the Junior Bush $600,000 worth of company
stock, plus a seat on the board, plus a consultancy worth $120,000 a
year -- despite suffering losses of more than $12 million dollars
against revenues of $1 billion in 1989.
In 1987 when creditors were threatening to foreclose, the Junior Bush
himself made a trip to Arkansas to meet criminal-banking kingpin Jackson
Stephens, whose Stephens Inc. arranged financing for the faltering
Harken Energy from a subsidiary of the Unon Bank of Switzerland (UBS).
Stephens Inc, of course, had ties to the notorious CIA money laundry
bank, the Bank of Credit and Commerce International (BCCI), where drug
trafficking and arms-smuggling profits mingled freely with looted S&L
and fraud-scam proceeds.
Then 1990 Bahrain awarded an exclusive drilling rights contract to
Harken and the Bass brothers added more equity to the deal. Six months
later George Bush Jr. sold off 212,140 shares grossing him $848,560.
When Saddam Hussein invaded Kuwait the Harken stock dropped suddenly.
The SEC was not notified, and no action for insider trading was taken
against the Junior Bush. Why? SEC chairman Richard Breeden was a
faithful Bush loyalist.
Today Eisenson, formerly one of the lead investors in NHP and Harken
and one of the primary portfolio managers of Harvard Management, runs a
private equity portfolio called Charlesbank Capital Partners LLC, Boston
which manages $1.4 billion in real estate investments for the Harvard
One of the partners of a company doing business with NHP, Scott
Nordheimer actually admitted to Fitts in June 1996 -- "We tried to get
you fired through the White House and that didn't work. So now the Big
Boys got together, and you're going to jail." Shortly thereafter the
qui tam lawsuit with the bogus whistle-blower charges was filed against
In this complicated story, there's another part of the puzzle which
needs exposure. The Hamilton Bushwhack involved Cargill personnel
falsely accusing the following companies of financial improprieties:
Hamilton Securities, as well as investment bankers Goldman Sachs and
Black Rock Financial, a subsidiary of PNC.
Goldman Sachs has been touted as one of the largest contributors to
the Democratic National Committee and the Clinton-Gore Presidential
Was the Hamilton Bushwhack just another outward sign of a covert
power struggle? Because of its implications, it had the potential to
lead to Clinton's impeachment on serious fund raising violations -- a
much more significant charge than the Monica Lewinsky Sexcapades used in
the Ken Starr Coverup.
More Spooky Harvard Connections
The key to the mystery of the Hamilton Bushwhack may ultimately be
found in the relationship between 1) government guaranteed/insured
mortgages, 2) asset seizure/forfeitures, and 3) the private companies
whose profits derive from an inside track with both government programs.
More lucrative than mere corporate subsidies, there are entire
segments of mega-business which depend on these government insider
For example, besides Harvard, the other primary investor in apartment
management company NHP was Capricorn Investments and Herbert S. "Pug"
Winokur, former Executive Vice President and Director of Penn Central
Corp, CEO of Capricorn Holdings Inc. and managing partner of three
Capricorn Investors Limited Partnerships, is one of those insiders who
may have benefited from the outrageous assault on Hamilton's open bid
auction for defaulted HUD mortgages.
Not incidentally, from 1988 to 1997, because of his large
investments, Winokur was also the Chairman and CEO of DynCorp, a US
government contractor whose customers include Department of Defense,
NASA, Department of State, EPA, Center for Disease Control, National
Institute of Health, the US Postal Service and other US Government
Most importantly, according to SEC registration documents (S-1),
DynCorp is the prime servicer on the Department of Justice Asset
Forfeiture Fund, having procured a five year contract with the
Department of Justice worth $217 million from 1993 to 1998. This 1000
person contract required staffing at over 300 locations in the US and
involved support of DoJ's drug-related asset seizure program. According
to SEC documents, DynCorp's personnel supports "US Attorney Offices that
are responsible for administering the federal asset forfeiture laws."
In other words, DynCorp could have profited first from a successful
seizure of HUD loan sales. Then, DynCorp could have also profited from
HUD "Operation Safe Home" seizures, which target low-income tenants,
mortgage holders and apartment owners. And, since the company has the
expertise and personnel, DynCorp could also have targeted these
communities with private surveillance teams and non-lethal weapons to
effect asset seizures using the phoney War on Drugs as a rationale.
By all accounts, there is at least a major conflict of interest in
Winokur's investments in HUD low income housing and his role in
Department of Justice seizures.
Imagine -- if you're Winokur, you can make money on defaulted HUD
mortgages, guaranteed by US taxpayers, as well as by kicking out
low-income housing tenants because of drug-related "asset seizures."
The criminal-corporate-government scams don't get any better.
In the case of Hamilton's open-bid auction process on defaulted HUD
mortgages, the potential $4.7 billion seizure of HUD loan sales would
have been a major plum for DynCorp as the prime servicer of the DoJ
Asset Forfeiture Fund.
By the way, Winokur also had the "foresight" not to board the
ill-fated flight to war-torn Yugoslavia, which took Secretary of
Commerce Ron Brown's life.
There are other spooky connections. According to Newsweek (Feb. 15,
1999), Reston, Virginia based DynCorp is a $1.3 billion firm, which also
trains police in Haiti and works on coca eradication in Colombia, where
three of its American pilots have died since 1997.
Reliable sources allege this shadowy outfit may be a CIA-military
proprietary, in other words, a privatized entity useful for "plausible
deniability." At any rate, it also provides "Yankee Mercenaries" for
the Colombian campaign against drug trafficking. Employing about 30 US
Vietnam War veterans, DynCorp has a $600 million contract to run and
maintain the planes and helicopters used in "anti-drug" efforts in Peru,
Bolivia and Colombia, according to the World Press Review (Nov. 1,
Postscript: Who says (corporate) crime doesn't pay? According to the
Harvard University Gazette, in June 2000, Herbert S. Winokur Jr. was
named to join the seven-member Harvard Corporation, the University's
executive governing board.
Doing Business with the Feds
Imagine having to wait more than 4 years to get paid on an invoice.
For more than $2 million.
From the US Government.
That, in short, is what happened to Hamilton Securities.
Doing business with the US Federal Government should come with a
WARNING: Saving money for the taxpayers can be hazardous to your health.
"HUD is withholding about $2 million of funds owed to Hamilton for
services performed for HUD," says Hamilton's President Catherine Austin
Fitts. "We also understand that this with-holding is at the request of
the Justice Department and the HUD Investigator General."
"As the lead investment banker on $10 billion of loan sales, we have
been able to preserve the integrity of these transactions. We intend to
take whatever steps necessary to recover our shareholders" and employees
value as we have done for the US taxpayers. The unsealing of the qui tam
lawsuit should free HUD to meet its outstanding contractual obligations
to Hamilton as quickly as possible."
Toward a Positive Future
And what is Catherine Austin Fitts doing now?
Besides trying to recover her life, she's moving ahead with her new
company called Solari Inc., and her vision, the Solari Investment Model,
community-based programs for local equity building and investment.
"Solari is an investment advisory service, which plans to re engineer
investment and financial structures at a local level, so that new
technology can be integrated into communities to increase jobs and
ownership," says Fitts.
"Over the last ten years, we have prototyped a substantial number of
transactions, venture capital and portfolio strategy to determine the
ideal way to refinance communities in the stock market," she continues.
"Our intention is to create a fund which can finance local development
-- and maintain local control -- through an investment model geared for
breakthrough transformations with individual, organizational and
Her far-reaching vision is an inspiration. "By creating one or two
Solari Stock Corporations (one for real estate and one for venture
capital) through a community offering, and swapping non-voting stock for
outstanding debt," says Fitts, "the community can lower short term debt
service and realign interests between numerous constituents who can be
positioned in a win-win financial model."
The problem, in one sense, is simple. The old model -- the
Soviet-inspired centralized command & control system which rules
Washington, its agencies and the beltway bandits feeding at the trough
of corporate subsidies -- must give way to the new paradigm of the
neighborhood investment model. It's a foregone conclusion: the corrupt
system which guarantees profits to insiders will be swept into the
ashcan of history, just as the Soviet Union and its proxies' brand of
communism has been discredited forever. It's just a matter of time.
In the end -- by building an alignment between spirituality and the
material world -- Catherine Austin Fitts believes that "everyone can
prosper through actions which integrate our spiritual principles in the
material world in which we live and work."
For more information of the Solari Model of Investment and
community-based profitability, click on http://www.solari.com.
Copyright 2000 Uri Dowbenko.
All Rights Reserved.
Uri Dowbenko can be reached by e-mail at email@example.com
This aricle is included in the new book
by Uri Dowbenko
"Bushwhacked: Inside Stories of True Conspiracy"
Available Now (Click here for more information)