Russian Mafia Conspiracy on Wall Street in Media and Government - 7

In 2003, he published a book, “Born to Steal,” which tells the story of Louis Pasciuto, a Genovese-linked criminal who worked for Hanover. Pasciuto cooperated extensively with Gary, so it is fair to say that the two are friendly. When Pasciuto was later sentenced to prison, Gary wrote an article in his defense.

Now, remember, Hanover Sterling, Pasciuto’s employer, was at the center of one of the biggest phantom-stock selling scandals of all time. The NASD eventually fined John Fiero (a.k.a. Bond — a member, along with Mr. Pink, of Amr Elgindy’s online short-selling discussion group) for naked shorting Hanover stocks in cahoots with several mobsters from the Gambino crime family. Their phantom stock selling destroyed a number of companies, and put Hanover out of business, probably with the acquiescence of Hanover’s Genovese handlers. The naked shorting also destroyed Adler Coleman, then one of Wall Street’s largest clearing firms.

That was in 1995 — one year before publication of “The Mob on Wall Street” — but Gary’s story makes no mention of phantom stock or illegal naked short selling. Indeed, Gary paints Fiero as the victim of Mafia harassment.

Since 1995, one of Gary’s most important sources has been Manuel Asensio, a short-seller who for many years was a hero to a certain clan of journalists. Several reporters, including Gary, have written worshipful profiles of Asensio, heralding his supposed expertise at identifying overvalued public companies. None of these stories allude to Asensio’s mysterious past, which seems to have included stints at a number of dubious brokerages.

In 2000, the NASD fined Asensio for failing to make an “affirmative determination” that stock could be borrowed before he sold it. (In other words, he sold phantom stock). In 2006, Asensio was barred from associating with any NASD member (think of the securities industry’s equivalent of Hannibal Lecter in straitjacket and mask) after he failed to respond to charges that he published false information in financial research reports. Before that, he worked extensively with Mike Wilkins, a short-seller and part-time screenwriter of Hollywood B-movies.

A fellow named Ed Manfredonia, who was the primary source for a story Gary wrote about corruption on the American Stock Exchange - the longest investigative report ever published by BusinessWeek–says he was sitting in Gary’s office when the BusinessWeek reporter received a fax from Wilkins’ hedge fund containing negative information about a company called Hemispherx BioPharma. Manfredonia says he told Gary that he had information from Asensio’s clearing firm, Spear Leads & Kellogg, that Asensio had sold 300,000 phantom shares in Hemispherx. But Gary ignored this information and wrote a negative story about the company, helping its stock to plunge by more than 50% — pure profit for Wilkins and Asensio.

Now, Ed is quite the character. A former stock broker who has been living on welfare for years, he says he’s been unable to get a job ever since making allegations that major players on the American Stock Exchange were committing all sorts of heinous acts - like smuggling cocaine from Colombia, and laundering money for Imelda Marcos.

Ed is a compact man and his eyes bulge behind Coke-bottle eyeglasses. He once came to my office at the Columbia Journalism Review and spent three straight hours delineating the “crimes” of Gary Weiss. During these three hours, I uttered maybe a couple dozen words. When I left the room to get a glass of water or use the restroom, Ed just kept right on talking. He has filed countless lawsuits (which he writes himself) against Gary and others, and spent a considerable amount of time following Gary around, asking why Gary lied in his stories. In January 2005, BusinessWeek filed a restraining order against Ed.

But Ed is, in certain respects, credible. A New York district attorney’s office once wired him as part of a large-scale investigation into some of the very allegations that he leveled against the American Stock Exchange. In a story titled, “Offering Credence to the Crank,” Gary wrote that, “In talking to his friends, current and former Amex officials and traders, I kept hearing the same thing: Ed gets too excited, but he is telling the truth.”

I think Gary was right to use Ed as a source (he’s certainly an improvement over the cast of crooks with whom Gary is currently collaborating) and it wasn’t very nice of him to call Ed a “crank.” Ed is different, a bit stressed-out perhaps, but he’s obviously had an inside look at corruption on Wall Street. Some of his information is solid. For example, his claims that Asensio sold phantom stock in Hemispherx BioPharma were later repeated in a report by expert court witness Robert Lowry, who spent 23 years in the SEC’s division of market regulation.

There is also this: In 1999, somebody entered the New Jersey mansion of Albert Alain Chalem, told him to kneel on his marble floor, and shot him in the head. The killers fired several more bullets into Chalem’s face, and then, in a manner less gruesome, killed his companion, Maier Lehmann.

Chalem and Lehmann were involved in various pump and dump schemes, but they were also short-sellers and to a certain group of journalists, popular sources of negative information about public companies. (One gets a sense of the sorts of people to whom some journalists turn for information). Chalem and Lehmann were also heavily involved in the production of phantom stock.

At the time of the murders, Ed offered to introduce Gary to Chalem’s bodyguard, who had good information that the killings were the work of the Russian Mob. Chalem had lost a bundle of money through a brokerage that was controlled by the Russians, and on the night before his murder, he and his bodyguard had met and argued with some Russian thugs. Threats were exchanged.

Deep Capture has looked into Ed’s story - and it checks out. There is every reason to suspect that the Russians (and, by extension, the Genovese crime family) were involved in the murders of Al Chalem and Meier Lehmann.

But Gary would not meet with the bodyguard. Indeed, the BusinessWeek reporter was adamant - he would not talk to anyone who intended to accuse the Russians of committing this, or any other crime. Nor would he mention Chalem and Lehmann’s involvement in selling phantom stock.

Instead, he wrote a story suggesting that Chalem and Lehmann died because they were pumping stocks with members of the Gambino crime family. As Gary knew, the Gambinos were at the time in a bitter feud with the Genovese and their Russian allies. (Gambino mobsters, remember, had threatened to murder the top revenue earner at Carol Remond’s source, Pacific International, because he had funneled a large amount of money to a Genovese-linked stock promoter). So it was no small decision to ignore information that the Russians had ordered the murders.

Ed suggests that Gary pinned the murders on the Gambinos because he was trying to get movie producers interested in his book, and movie producers find the Italian Mob more compelling than the Russians. Either that, or Gary’s favorite sources had a beef with the Gambinos.

In an email to me, Gary’s source Manuel Asensio wrote, “I don’t know anything at all about Al Chalem and Meier Lehmann. I don’t know who they are and have never read or heard anything about them, or spoke to anyone, including Gary, about it.” In another email, he said he has never talked to Gary about the Mafia, he has never read Gary’s articles about the Mob on Wall Street, and he has no interest in the subject.

I called Asensio to ask about a lawsuit that had claimed that he had previously worked for First Hanover, a Mob-linked brokerage run by a guy who later became a crack addict and a homeless person. I also wanted to know about Asensio’s experience in selling phantom stock.

He said he never worked for First Hanover. He said there is nothing wrong with selling phantom stock - it should be legal. He listened as I described some of the information I had gathered for this story.

And then he offered to put me on his payroll.

* * * * * * * *

So, in November 2006, I was working on this story at the Columbia Journalism Review, and I had two large diagrams on the wall above my desk. One of these diagrams showed the multiple links between hedge fund manager William Ackman, a friend of Cramer who was funded by the aristocrat Marty Peretz, and Gene Philips, a real estate magnate who was arrested in 2000 along with around 150 stock brokers from the five New York Mafia families - the largest securities fraud bust in history. (Philips was later acquitted).

The other diagram had, written on the top, inside a box, the name of a hedge fund: Kingsford Capital. This hedge fund, I had learned, specialized in short-selling and was managed by Mike Wilkins, the Hollywood screenwriter who had extensively collaborated with Manuel Asensio. So “Asensio” and “Wilkins” were written on the diagram.

I had also learned that another manager of Kingsford Capital was Cory Johnson, who, along with Herb and Jim Cramer, was one of TheStreet.com’s founding editors - a member of “Murderers’ Row.” (Johnson had previously earned his financial creds as the editor of a hip-hop basketball magazine.)

At the time, Kingsford was also paying consulting fees to Justin Hibbard, who had just left his job at BusinessWeek. Since Kingsford and Asensio were favored sources of that other former BusinessWeek reporter, Gary Weiss (whose only employment at the time was writing a blog smearing Patrick Byrne and denying the existence of phantom stock), I had put his name on the diagram, too. And finally, I had noted on the diagram that several companies shorted by Kingsford Capital and Asensio happened to have been victimized by phantom stock.

So there they were - these diagrams.

And then, one day in November 2006, there was a man.

He walked into the offices of the Columbia Journalism Review, strolled up to my desk, glanced at the diagrams, and smiled. Then he went into our conference room with an editor of the Columbia Journalism Review.

After a short time, the editor invited me into the conference room to meet this man. The man was very cordial. He smiled and presented me with his business card.

The card said, “Mike Wilkins, Kingsford Capital.”

Mr. Wilkins had a proposal for the Columbia Journalism Review.

And this proposal involved a large sum of money.

* * * * * * * *

Meet Judd Bagley, crack technologist and Deep Capture investigator. He’s at his desk, which is half-covered with a tangled mess of wires and hard drives–his hands are up in the air, fingers fluttering like the wings of a hummingbird, and he’s in the midst of a gorgeously long sentence that begins with something about Spartan war tactics, then segues into thoughts on Tennessee Williams and the origins of the marble in the Parthenon, and now seems finally to be ending with a lengthy explication of his “methods” for exposing the obsessions and transgressions of a former BusinessWeek reporter named Gary Weiss.

“…and using my methods,” he concludes with an adjustment of his spectacles, “I’ve been able to deduce that Gary Weiss is…”

..that Gary Weiss is, in essence, a charlatan and a scoundrel.

It is owing to Judd’s work that we know, without a shadow of doubt, that the hedge fund manager who calls himself Mr. Pink pays Gary’s friend, the flimflammer Floyd Schneider, through his intermediary Michelle McDonough, a convicted stock manipulator formerly known as Michelle Sarian. Hedge funds affiliated with Mr. Pink, meanwhile, are paying convicted fraudster Barry Minkow, who is receiving large wads of money from the crook Sam Antar, who spends most of his time working with Gary to smear Patrick Byrne and Overstock.

In appreciation of Judd’s efforts in delineating these connections, Sam Antar the Crook has issued some nasty threats, at one point posting the names of Judd’s two young daughters on the internet.

So, right–these (along with Manuel Asensio and Kingsford Capital) are Gary Weiss’s friends. He’s probably been working with at least some of them since 1995, when he published “The Mob on Wall Street” and another story, “The Secret World of Short-Sellers.” In the latter story, Gary provided a sympathetic account of a short-seller who wasn’t named, but whom we know to be Asensio. The short-seller is painted as something of a hero for attacking a small oil company called Solv-Ex.

As Gary knew (because he mentioned it in passing in “The Mob on Wall Street”), Solv-ex had alleged at the time that a group of Mafia-linked investors were playing games with its stock. This was never proven. But a federal grand jury later looked into suspicious short-selling of Solv-ex, and the company sued Asensio, along with Michelle Sarian (a.k.a. Michelle McDonough) and Deutsche Bank’s Morgen Grenfell Asset Management. (Separately, Peter Young, a Morgen Grenfell fund manager who had set up secret accounts to invest in the oil company, was prosecuted in England. Peter showed up in court wearing a floral dress, bright red lipstick, and high heels - and then plead insanity).

In any case, we know that Michelle Sarian (a.k.a. Michelle McDonough) is now helping Mr. Pink pay Gary’s friend, Floyd the Flimflammer, to smear public companies on the internet. And thanks to Judd’s methods (pure genius, these methods) we have concrete proof that Gary has himself used a variety of fake names to post thousands of messages on internet stock discussion boards, such as Yahoo! The messages either defame people who believe that phantom stock is a problem, or contain negative information about companies shorted by Mr. Pink and other hedge funds affiliated with the Cramer constellation.

And, really, Gary’s efforts go way beyond the call of duty. By tracking the IP footprints left by Gary’s computer, Judd has been able to observe the former BusinessWeek reporter posting, non-stop, for stretches of 24 hours and longer, his writing becoming more and more garbled as time goes by.

Gary also spends time on Amazon.com, writing anonymous reviews of his own books. As soon as this habit was exposed on Judd’s blog, Antisocialmedia.net, Gary scrambled to erase the reviews, but we preserved a few nice examples. Here is Gary’s review of Gary’s book about the Mob on Wall Street:

“Why? BECAUSE YOU CAN’T PUT IT DOWN!!!!! I took this book to the beach during the July 4th weekend and made the mistake of starting to read it in the afternoon. There I was as the sun was setting at 8, and I was still reading it. Everyone was gone and I was squinting as the sun went down. That’s how electrifying this book is.”