01-14-11

http://blackstarnews.com/news/123/ARTICLE/7061/2011-01-14.html

As I have discussed in previous articles in this series on corruption on Wall Street, Assistant United States Attorney Frances Fragos and FBI Special Agent Joseph Yatremski were spearheading an investigation into criminal activity at the American Stock Exchange.

On September 15, 1993 Yastremski had entered the office of Steven Lister, Senior Vice President of Compliance at the American Stock Exchange, with a subpoena for the Amex’s records of the stock fraud, PNF.  Soon afterwards Fragos empanelled a grand jury to look into the Italian Mafia stock fraud, PNF.  And the investigation was leading into new and more important areas.

Fragos and Yastremski had discovered that Louis Miceli and Robert VanCaneghan, members of the Board of the American Stock Exchange, were laundering drug money from the Cayman Islands; and that Miceli was smuggling cocaine from the Bahamas.

Yastremski would telephone me to find out more information- information concerning the identities of the individuals for whom Miceli and VanCaneghan were laundering money and smuggling cocaine.  But no one at the Amex knew this information. I told Yastremski that I had been informed that the accountant for Miceli and VanCaneghan had information regarding the money laundering.  This information came from a source in the American Stock Exchange Division of Examinations, which was required to audit the accounting records of Amex members.

And who was the clearing firm for the specialist firm of Miceli-VanCaneghan? None other than Spear Leeds and Kellogg, which was purchased by Goldman Sachs in 2000.

I knew that if Yastremski and Fragos were to continue their investigation into Spear Leeds and Kellogg and the money laundering at the Amex, they would discover that another member of the Amex Board of Governors who cleared his trades through SLK, was involved in smuggling cocaine from the Bahamas. This had been known to me since 1990 when I overheard Miceli tell VanCaneghan that the Board member had introduced him to the drug smuggling ring.

Exactly how the Board member became involved in the cocaine smuggling business is not known to me. But it was widely known that he had expensive tastes from his Ferrari, whose engine he blew one night when he was inebriated, to his expensive ocean-going fishing boat.

He was not a big user of cocaine; he preferred to drink- from breakfast to late night partying. It was also widely known that his specialist unit had been suffering losses. He was forced to give up his options specialist unit because it was losing money. His stock specialist unit was not profitable.

Even worse, this Board member was no longer receiving information from his source at Morgan Stanley regarding the manipulation of the XMI. Thus, he was no longer able to earn in excess of $1 million per annum by trading on inside information.

So I had high hopes that Miceli and VanCaneghan would be indicted- Fragos practically assured me of this. Fragos had told me in a telephone conversation that the inflow and outflow of funds from the specialist account of Miceli-VanCaneghan would be prima facie evidence of money laundering and income tax fraud.

But this was something else. If Fragos could convict Miceli and VanCaneghan for money laundering, then Spear Leeds and Kellogg would be indicted for facilitating this money laundering. And this investigation into money laundering and the ensuing tax fraud could result in an indictment of senior executives of Wagner Stott, a clearing subsidiary of Merrill Lynch which facilitated the stock fraud PNF.

And several years later I would be told of the true extent of money laundering and tax fraud at Spear Leeds and Kellogg.

In 1997 Joseph Roffler, a former senior managing director of Spear Leeds and Kellogg who was in charge of professional margin when Miceli and VanCaneghan were laundering drug money, told me that the senior partners of SLK knew that Miceli and VanCaneghan were laundering drug money.  But Roffler gave me a more expansive view into the clearing operations of Spear Leeds and Kellogg.

Roffler told me that Miceli and VanCaneghan were not the only high ranking Amex members, who were laundering money through Spear Leeds and Kellogg.  According to Roffler, who had access to the trading sheets and financial records of every individual and firm that cleared through Spear Leeds and Kellogg, money laundering via trading accounts at SLK was ubiquitous- and Spear Leeds never reported anyone for laundering drug money and income tax fraud.

Earlier, in December 3, 1993 the Italian Mafia made its move. My life was threatened by an Amex member who was a front man for the Italian Mafia. And this would be the turning point of the federal investigation.