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>From: LePatron@xxxxxxxxxxxxxxxxxxx
>To: trdoptions@xxxxxxxxxxx
>Subject: SPECIAL! - E.F Hutton, Republic, Crestvale, The Irish, "Pizza
>Connection-Money Laundering Case"
>Date: Fri, 10 Sep 1999 02:11:28 -0400
>
>Le Metropole members,
>
>Methinks there is a big scandal here. One of your café
>members used to work in a very senior capacity at
>E.F. Hutton. Remember the great jingle: "When E.F. Hutton
>talks, everybody listens."
>
>I am listening!
>
>Your Cafe member sent me the following email. It is of
>special note to me because I met Arnold Phelan a few
>times in the Big City way back when, God rest his soul.
>Being an Irishman, this story pales the heart:
>
>"Sweeney and Curley, the CEO of Cresvale were #2 and
>3 executives in the Futures Division of EF Hutton in
>the mid-1980s. They and their boss, Arnold Phelan,
>were responsible for tipping off the Mafia that the
>FBI was onto them, thus blowing the famous
>"Pizza Connection" drugs and money-laundering
>case."
>
>Here is his follow up email:
>
>"Cresvale was part of Princeton. Princeton blames
>Republic; Republic blames Princeton. All I know is
>that Sweeney and Curley worked together for over 15,
>probably 20 years, at EF Hutton, Prudential, and
>then at Republic...Sweeney was in fact Curley's protege
>as the article below points out. What are the odds that
>Curley would stick his protege with a dirty deal
>without Sweeney understanding what it was? In this
>case I say virtually nil. Republic and Cresvale cooked
>up these "tobashi" deals together. I believe
>under US accounting they are illegal. If Armstrong didn't
>know what was going on he either is not too smart,
>incompetent, or both."
>
>My source went on to tell me some great nitty gritty.
>For example, Arnold Phelan met with one of the Mafia
>boys at a bar who had $15 million in cash with him.
>Phelan called his guys at the cage in N.Y. and said,
>"hey, we got $15 million here." Another Irishman, a
>portly off duty retired cop with a pistol in his pocket
>was sent to pick up the money.
>
>Funny thing was, according to my source, Phelan and E.F
>Hutton's own hubris brought them down. Will the same
>happen to the "manipulators of the gold market."
>
>Right before E.F. Hutton went tapioca because of a
>check kiting scandal, and their own arrogance, my
>source told me the following two great stories.
>
>Phelan went into a big exec meeting with a new,
>sparkling Rolex and told his colleagues how he got it.
>"The Don."
>
>The other beauty that my source sat in on: It was in the
>big Arab money days. These Irish cronies were trying
>to figure out a way to make another fast buck with
>an Arab Shiek. Phelan, Curley and Sweeney came up
>with the idea of some sort of gold backed credit card
>for the Moslems to get around the Moslem usury laws -
>bottom line of that is that Moslems are not supposed
>to charge interest. My source thought
>this Irish gang was nuts. After the Sheik left,
>he asked, "what % of our clients are Jewish?" The
>answer from the Irish boys was 50%. He countered with,
>"then what are even looking at this for?"
>
>As you all know, sources tell have told me Martin
>Armstrong is mega short "borrowed gold." That is
>why I press on about this story. If it is true what
>I have been told about his short gold position,
>I want to expose it. And, perhaps that will begin
>to expose the entire gold market manipulation and
>scandal. This whole affair is disgusting and
>those that have perpetuated the gold market
>"collusion scam" should be demonized and prosecuted.
>
>Martin Armstrong attacked the Gold Anti-Trust
>Action Committee's credibility. I know challenge
>his. Republic Bank would not open a GATA bank account.
>Now, it is time that their own bank accounts be
>opened. What goes around comes around!
>
>In case all, or part, of this is new to you, I
>have attached last Sunday's Reuters wire which will clarify
>what this is all about:
>
>Sunday September 5 2:08 AM ET
>
>Brokerage More Trouble Than It's Worth
>By Jack Reerink
>
>NEW YORK (Reuters) - Republic New York Corp.
>(NYSE:RNB - news), the small
>
>"New York retail bank that billionaire Edmond Safra
>built into a global powerhouse, made a brief foray
>this decade into U.S. futures and stock
>brokering that turned out to be more trouble than
>it was worth.
>
>A probe into alleged wrongdoing at Republic New York
>Securities sent the parent company scrambling this
>week to overhaul the unit's management and
>reassure investors that the investigation would
>not scuttle Republic's $10.3 billion merger with
>Britain's largest banking group, HSBC Holdings Inc.
>
>The probe, disclosed this week, is only the latest
>in a series of strange twists and turns in the brief
>history of Republic's obscure securities
>unit. In seven years, Republic New York Securities
>has seen sweeping changes in its business and
>management; regulatory problems; lagging profitability.
>
>The probe is especially ``unfortunate,'' as bank
>spokeswoman Melissa Krantz put it, because Republic
>was close to dismantling the securities unit as
>part of a restructuring.
>
>The unit has come under regulatory scrutiny for
>dealings with two affiliates of New Jersey financial
>forecasting and investment firm Princeton Economics
>International. The U.S. operations of one of the
>affiliates being probed is run by the former chief
>executive of Republic New York Securities.
>
>Republic's securities unit generated just $9.6
>million in commission income last year, a minuscule
>sum compared with even the parent company's latest
>quarterly profit of $143 million
>
>The unit did not achieve the bank's target of
>returning 15 percent on equity. Clients had fled its
>futures brokerage operations: the unit listed
>$71 million in customer funds this February, almost
>one-fifth of the $347 million it listed less than
>four years before.
>
>The bank, which declined to comment, has fired the
>head of the unit's futures department and has suspended
>its chief executive, James Sweeney, pending the outcome
>of the probe. Sweeney could not be reached for comment.
>
>Analysts and sources close to the situation said
>regulators are investigating whether Republic
>inflated the value of futures and other derivatives it
>held for those Princeton affiliates, investment manager
>Princeton Global Management and futures broker
>Cresvale International.
>
>Investors jittery over the merger's fate sent the
>parent company's stock tumbling 10 percent Thursday.
>Republic shares recovered $2.13 Friday to
>close at $64.31 on the New York Stock Exchange, after
>bank officials reassured investors the probe will
>merely delay, and not scuttle the merger.
>
>Republic Friday delayed its shareholders vote on
>the merger to Oct. 12, from an earlier date of Sept. 9.
>
>The probe started in May, when Japanese investigators
>inspected Cresvale's Tokyo office. Republic said it
>informed U.S. regulators after it received a
>letter from Japanese investigators, and is
>cooperating with the probe.
>
>Analysts and a Republic shareholder told Reuters
>they thought the Republic unit and the Princeton
>affiliates may have participated in so-called
>``tobashi'' deals, in which Japanese institutions
>hide losses through complex derivatives transactions.
>The probe is limited to the Republic's dealings with the
>Princeton affiliates and does not extend to other client
>relationships, these sources said.
>
>Princeton affiliates officials did not return phone calls seeking comment
>on the probe.
>
>``It could be innocent, like (Republic brokers)
>didn't know what they were doing was technically not
>correct,'' said Nomura Securities analyst Oscar
>Wu. ``Or it could be something more sinister.''
>
>Analyst Gerard Cassidy of Tucker Anthony agreed.
>
>``It appears one of two things happened: Princeton
>told Republic this is what (the investments) are worth
>and Republic took it at face value,''Cassidy said.
>``Or Princeton in conjunction with Republic Securities
>determined the value, which was artificially inflated.''
>
>Republic originally started the securities unit,
>which has offices in Philadelphia and Chicago,
>to diversify its revenues from lending income to
>fee-based income such as stock and futures brokerage,
>Cassidy said.
>
>The bank hired former executives of brokerage Shearson
>Lehman, which was owned at the time by American
>Express Co. (NYSE:AXP - news) Shearson faced
>financial difficulties in the early 1990s.
>
>Former Shearson executive Louis Lloyd set up
>Republic's unit in 1992, and was joined by his former
>boss and Shearson's former chairman, Peter Cohen,
>who became chairman of Republic New York Securities.
>The firm also hired Lee Hennessee, an advisor who
>helped clients pick hedge funds, or unregulated
>investment funds for wealthy investors that trade
>a variety of securities usually using borrowed money.
>
>The firm grew rapidly, and focused on hedge funds,
> brokerage, proprietary trading, and so-called
>soft-dollar business in which a brokerage flips
>back part of its commission income to investment
>advisors that bring in client business. Advisors
>often use those monies to pay for research, usually
>purchased from the firm.
>
>Republic had 80 of such soft-dollar agreements by
>early 1994, according to U.S. Securities and Exchange
>(SEC) documents. Around that time, Republic
>had a change of heart about the unit and decided
>to downsize it and focus on brokerage services only.
>
>Cohen left to set up his own firm, Hennessee took her
>research group elsewhere, and Lloyd and others were
>ousted. A New York Stock Exchange arbitration panel
>in 1997 ordered Republic to pay Lloyd more than $3
>million to settle charges of breach of employment
>contract.
>
>Republic bank insider Daniel Morris served as the
>unit's chairman until late 1994, when Republic
>named former Prudential Securities futures executive
>James Curley as the unit's chief executive and
>chairman. Sweeney, who joined Republic as a consultant
>in 1993, became the unit's chief operating officer.
>
>Curley left in 1996 to become the head of U.S.
>operations of Cresvale, the company that investigators
>are now focusing on. The bank has declined to
>say when its relationship with Cresvale started.
>Curley, who also is a director of the Chicago Board
>of Trade, did not return repeated phone calls.
>
>Sweeney, who replaced Curley as the unit's head in
>1996, paid a $25,000 fine earlier this year for paying
>$84,000 in soft dollar rebates to now defunct Sweeney Capital Management,
>which used the monies for operating
>expenses such as buying office furniture without
>telling clients. James Sweeney is not related to Sweeney
>Capital, or its president, Timothy Sweeney, according
>to the SEC.
>
>Republic paid a $50,000 fine in the same case. The
>unit also in 1997 paid one of its clients $13 million
>in compensatory damages to settle charges of
>unauthorized trading and gross negligence, according
>to documents of the futures industry's self-regulatory
>organization, the National Futures Association."
>
>My final thought is this: Martin Armstrong said today that
>"he wanted to talk to his lawyers to find out what was
>going on." Give me a break. You do not talk to lawyers about
>what was going on in your trading operations. You talk to
>your lawyers about how to save your own skin!
>
>All the best,
>
>Bill Murphy
>Le Patron
>http://www.LeMetropoleCafe.com
>
>
>
>
>
>
>
>
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