Video: How To Hack A Diebold Voting Machine!!!
Anyone can do it!! A must-watch video:
How To Hack A Diebold Voting Machine!!!
Wednesday, August 02, 2006
WORST EVER SECURITY FLAW FOUND IN DIEBOLD TS VOTING MACHINE
FOR IMMEDIATE RELEASE
Subject: WORST EVER SECURITY FLAW FOUND IN DIEBOLD TS VOTING MACHINE
Contact: Alan Dechert
Reference: PICTURES
(Click on thumbnail. Click again on lower half of picture for high resolution)
SACRAMENTO, CALIFORNIA -- “This may be the worst security flaw we have seen in touch screen voting machines,” says Open Voting Foundation president, Alan Dechert. Upon examining the inner workings of one of the most popular paperless touch screen voting machines used in public elections in the United States, it has been determined that with the flip of a single switch inside, the machine can behave in a completely different manner compared to the tested and certified version.
“Diebold has made the testing and certification process practically irrelevant,” according to Dechert. “If you have access to these machines and you want to rig an election, anything is possible with the Diebold TS -- and it could be done without leaving a trace. All you need is a screwdriver.” This model does not produce a voter verified paper trail so there is no way to check if the voter’s choices are accurately reflected in the tabulation.
Open Voting Foundation is releasing 22 high-resolution close up pictures of the system. This picture, in particular, shows a “BOOT AREA CONFIGURATION” chart painted on the system board.
The most serious issue is the ability to choose between "EPROM" and "FLASH" boot configurations. Both of these memory sources are present. All of the switches in question (JP2, JP3, JP8, SW2 and SW4) are physically present on the board. It is clear that this system can ship with live boot profiles in two locations, and switching back and forth could change literally everything regarding how the machine works and counts votes. This could be done before or after the so-called "Logic And Accuracy Tests".
A third possible profile could be field-added in minutes and selected in the "external flash" memory location, the interface for which is present on the motherboard.
This is not a minor variation from the previously documented attack point on the newer Diebold TSx. To its credit, the TSx can only contain one boot profile at a time. Diebold has ensured that it is extremely difficult to confirm what code is in a TSx (or TS) at any one time but it is at least theoretically possible to do so. But in the TS, a completely legal and certified set of files can be instantly overridden and illegal uncertified code be made dominant in the system, and then this situation can be reversed leaving the legal code dominant again in a matter of minutes.
“These findings underscore the need for open testing and certification. There is no way such a security vulnerability should be allowed. These systems should be recalled”
OPEN VOTING FOUNDATION is a nonprofit non stock California corporation dedicated to demonstrating the need for and benefits of voting technology that can be publicly scrutinized.
Chuck lashes 9/11 fund; 'Stingy' firm slighting heroes, he sez, while Hil takes aim at EPA's 'secrets'
NY Daily News
Chuck lashes 9/11 fund
'Stingy' firm slighting heroes, he sez, while Hil takes aim at EPA's 'secrets'
BY CORKY SIEMASZKO
DAILY NEWS STAFF WRITER
Show some compassion to ailing Ground Zero heroes - and stop acting like a "stingy, bottom-line-obsessed corporation."
That was the message from Sen. Chuck Schumer (D-N.Y.) to the WTC Captive Insurance Co. yesterday after the Daily News reported that the city entity was fighting first responders - instead of compensating them for their illnesses.
Schumer's angry broadside came as Sen. Hillary Clinton and two New York legislators - spurred on by another report by The News - asked the feds to expand their ongoing probe of the Environmental Protection Agency's response to 9/11.
"No one, including myself, involved with the establishment of this fund expected it to behave like a stingy, bottom-line obsessed corporation," Schumer wrote to insurance company CEO Christine LaSala.
Schumer said WTC Captive was set up with $1 billion in federal funds after 9/11 not just to insure New York City, but to "ensure coverage for the nearly 40,000 workers who gave of themselves at Ground Zero."
But city officials and WTC Captive insisted that the company was created as an insurance fund, not a compensation fund.
In a statement, the city Law Department said, "While the city had urged Congress, and continues to do so, to pass legislation that would compensate all WTC workers who were injured - as was done through the Victim Compensation Fund - that legislation was not enacted.
"Instead, Congress created an insurance fund and the Captive Insurance Company is obligated to defend all claims that have a reasonable and valid defense."
Meanwhile, Clinton (D-N.Y.) and Reps. Jerrold Nadler and Carolyn Maloney, both Manhattan Democrats, asked the U.S. Government Accountability Office to focus on documents relating to the EPA's role after 9/11 that were classified as secret.
The News reported last week that the White House gave then-EPA chief Christie Whitman the power to hide potentially embarrassing paperwork in 2002 - after the EPA was accused of downplaying the dangers at Ground Zero.
Whitman, who resigned as EPA chief in May 2003, insisted yesterday, "The EPA consistently put out all available information as to the air quality surrounding Ground Zero and lower Manhattan."
The executive order, Whitman added, "was designed to prevent terrorists from identifying chemical sites around the country."
The fresh demands for answers by New York's leading politicians came after a series of damning Daily News editorials that detailed the plight of 12,000 ailing Ground Zero workers.
Major world cities team up to fight global warming
Reuters
Major world cities team up to fight global warming
LOS ANGELES (Reuters) - Los Angeles, London, New York, Seoul and 18 other cities joined forces on Tuesday in a global warming project aimed at reducing greenhouse gas emissions.
Launched by former President Bill Clinton's foundation, the initiative will allow cities to pool their purchasing power and lower the price of energy-saving products and provide technical assistance to help them become more energy efficient.
Urban areas are responsible for more than 75 percent of all greenhouse gas emissions, making reduced energy crucial in the effort to slow the pace of global warming.
Energy-efficient traffic lights, street lighting, the use of biofuels for city transport, and traffic congestion schemes were some of the practical steps that cities are expected to take to reduce greenhouse gases.
"The world's largest cities can have a major impact on this. Already they are at the center of developing the technologies and innovative new practices that provide hope that we can radically reduce carbon emissions," said London Mayor Ken Livingstone, who launched the initiative in Los Angeles with Clinton and British Prime Minister Tony Blair.
The Clinton Foundation said it hoped that coordination between major cities will boost efforts now being made by some areas on an individual basis.
The partnership with the foundation began with the participation of 22 cities -- Berlin, Buenos Aires, Cairo, Caracas, Chicago, Delhi, Dhaka, Istanbul, Johannesburg, London, Los Angeles, Madrid, Melbourne, Mexico City, New York, Paris, Philadelphia, Rome, Sao Paulo, Seoul, Toronto and Warsaw.
Marine killed in Iraq was US senator's nephew
Reuters
Marine killed in Iraq was US senator's nephew
By Will Dunham
WASHINGTON (Reuters) - Marine Corps Cpl. Phillip Baucus, a nephew of U.S. Sen. Max Baucus of Montana, was killed during combat operations in Iraq last Saturday in restive Anbar province west of Baghdad, the Pentagon said on Tuesday.
The Democratic senator's office issued a statement saying the family was devastated by the death of the 28-year-old Marine from Wolf Creek, Montana.
"Phillip was an incredible person, a dedicated Marine, a loving son and husband, and a proud Montanan and American. He heroically served the country he loved and he gave it his all. We loved him dearly and we'll miss him more than words can ever express," Sen. Baucus said in a statement.
The Pentagon said in a statement Phillip Baucus died "while conducting combat operations" in Anbar but did not specify the cause. Thousands of Marines are serving in Anbar province, the epicenter of a tenacious Sunni Muslim Arab insurgency and one of the most dangerous parts of Iraq.
He was assigned to 3rd Light Armored Reconnaissance Battalion, 1st Marine Division, I Marine Expeditionary Force, based in California, the Pentagon said.
Sen. Harry Reid of Nevada, the Senate Democratic leader, announced the Marine's death on the Senate floor and offered Sen. Baucus sympathy and condolences.
About 750 U.S. Marines have been killed in the war, which began in March 2003. The overall U.S. military death toll in the war stood at 2,578, the Pentagon said on Tuesday.
(Additional reporting by Vicki Allen)
Ex-Safeco CEO and Senate candidate McGavick sued
Reuters
Ex-Safeco CEO and Senate candidate McGavick sued
By Jonathan Stempel
NEW YORK (Reuters) - Mike McGavick, a Republican candidate for the U.S. Senate from Washington state, was sued on Tuesday for allegedly accepting up to $28 million of improper payments from Safeco Corp. after he resigned as chief executive, a shareholder said on Tuesday.
The shareholder, Emma Schwartzman, a great-great-granddaughter of one of Safeco's founders, said her lawsuit was filed with the U.S. District Court in Seattle. She is also suing Safeco directors and the Seattle-based insurer.
McGavick, a 48-year-old Republican, is running for the Senate seat held by Maria Cantwell, a Democrat.
According to the complaint, McGavick resigned from Safeco at the end of 2005, but was allowed to work a few days in January and February 2006 to collect payments, including bonuses and stock option packages, that he had forfeited by resigning.
"McGavick thus looted Safeco on his way out the door," the complaint said. "The board acquiesced to this malfeasance."
The complaint said that McGavick has on campaign disclosure forms reported 2006 income of $15 million to $28 million.
In a statement, McGavick said the allegations over his pay were "without merit," and blamed Cantwell's allies for what he called a "politically motivated character attack."
A representative for Cantwell in Seattle did not immediately return a call seeking comment.
Safeco spokesman Paul Hollie declined to comment, saying he had not seem the complaint.
At the insurer's shareholder meeting in May, non-executive chairman Jay Brown said two outside consultants reviewed McGavick's compensation, and Safeco concluded it was getting "very good value in return for what we were paying."
Schwartzman wants the money returned and a constructive trust until an accounting can be made.
In a statement, Knoll Lowney, a lawyer representing Schwartzman, accused McGavick of using some of the money to fund his Senate campaign. He said, though, that the lawsuit was "about corporate corruption, not partisan politics."
Among the directors named in the complaint were Gary Locke, a former Washington governor, and Kerry Killinger, chief executive of Seattle-based Washington Mutual Inc., the largest U.S. thrift.
Andrew Krueger, a spokesman for Lowney's law firm, said Schwartzman is a 27-year-old student at the University of Washington and a descendant of C.D. Stimson, a founder of the General Insurance Co. of America, which evolved into Safeco.
Safeco expects to release second-quarter results on Wednesday. Its shares fell 56 cents to close at $53.16 on the Nasdaq on Tuesday.
US wins appeal to seek NY Times phone records
Reuters
US wins appeal to seek NY Times phone records
By Christine Kearney
NEW YORK (Reuters) - The U.S. government won an appeal on Tuesday allowing it to seek phone records of New York Times reporters investigating government probes into Islamic charities shortly before the September 11 attacks.
The U.S. Second Circuit Court of Appeals ruled in favor of the government, which wants to know the identity of government sources who might have given information to two New York Times reporters, including former reporter Judith Miller.
The decision is the latest episode in the free speech battle that has pitted U.S. prosecutor Patrick Fitzgerald against the Times and Miller.
Miller spent 85 days in jail last year for resisting Fitzgerald's requests to reveal her sources in a separate case that led to the indictment of Vice President Dick Cheney's chief of staff, Lewis "Scooter" Libby.
The case decided on Tuesday involves Fitzgerald heading a grand jury investigation into how Miller and fellow reporter Philip Shenon learned of government plans to search the premises of two Islamic charities, and sought comment from them before the search took place.
The Times filed a lawsuit and successfully blocked a threatened subpoena being sought by Fitzgerald to seek the phone records of the two reporters after the newspaper refused to identify their sources.
In a 2-1 ruling, the appeals court overturned a lower court ruling that said the phone records were protected from disclosure by a reporter's privilege under the First Amendment of the Constitution, which guarantees freedom of speech and the press.
"We are disappointed in the decision," said the Times' assistant general counsel George Freeman.
A spokesman for Fitzgerald's office declined to comment.
The appeals court agreed a reporter's third party telephone records can be covered by the same privileges afforded to their personal records, but said the government had shown the information could not be obtained elsewhere.
The grand jury investigation's "serious law enforcement concerns" override a reporter's protection of privilege, the court said, and because the reporters' actions were central to the investigation, "there simply is no substitute for the evidence they have."
"No grand jury can make an informed decision to pursue the investigation further, much less to indict or not indict, without the reporters' evidence. It is therefore not privileged," the court said.
Tuesday, August 01, 2006
A Gang Under Siege: They were 'saviors of the Senate.' But the Gang of 14 may pay a price at the polls.
MSNBC.com
A Gang Under Siege
They were 'saviors of the Senate.' But the Gang of 14 may pay a price at the polls.
By Jonathan Darman and Holly Bailey
Newsweek
August 7, 2006 issue - Fran DeWine just wanted to talk about apple pie. Campaigning last month for her husband, Ohio Republican Sen. Mike DeWine, she handed constituents a family cookbook, complete with Mike's favorite pie recipe and her own "Fran's Best Bread." But one voter was interested in a less appetizing topic: why had her husband defied his party leadership on judicial nominees and joined the Senate's so-called Gang of 14? Taken aback, Fran rambled on like a schoolteacher, explaining the nature of filibusters and the history of Republican appointees on Capitol Hill. Later, when pressed by a reporter, she was more succinct: her husband had defected, she confided, in order to save the Senate.
It is an odd political moment when a wife believes her husband's role in rescuing history's greatest deliberative body is something she has to explain. After all, in May 2005, when the seven Democrats and seven Republicans in the Gang of 14 announced they'd reached a deal on President George W. Bush's judicial nominees—preventing the dread "nuclear option" (where a majority would end a Democratic filibuster and destroy the rules of the Senate)—they were the first to proclaim they'd brought democracy back from the brink. With a classically senatorial mix of solemnity and self-congratulation, they wondered if their deal might be the start of a new civility in Washington. "We have lifted ourselves above politics," said the old Senate stalwart, West Virginia Democrat Robert Byrd. "Thank God for this moment."
But politics has a way of bringing senators back down to earth. With control of Congress on the line this November, both political parties are pressing the wedge issues—immigration, stem-cell research and, most prominently, Iraq. And creatures of the center are struggling to simply stay in the game. Nowhere is the struggle more desperate than inside the Gang of 14, whose alliances across the aisle could cost three senators their jobs. Their fellow Gang members are helping where they can, but some wonder about the future of moderate coalitions in American politics. "This is an incredibly close election," says former Louisiana Democratic senator John Breaux, himself a celebrated centrist. "The bases of both parties don't like anyone who looks like they've helped the other side."
So far, DeWine has most artfully pulled off the balancing act—not surprisingly by stressing his partisan credentials. At first, his association with the Gang of 14 threatened to sink his political career—one state religious leader called him "an absolute embarrassment." But after the agreement, the Senate confirmed a slew of Bush's federal-court nominees and two Supreme Court justices, and DeWine skillfully recast his participation in the Gang as service to the conservative cause. DeWine tells NEWSWEEK he has an easy answer when confronted by party members who still question the compromise: "Look, we got our judges ... We won." The strategy has helped DeWine shore up Republican support and focus on his Democratic challenger, whom he trails by some eight points.
He isn't the only one struggling. In Connecticut, Democrat Joe Lieberman is withering under charges he's too quick to jump into bed with the Republican Party. Across the state line in Rhode Island, Republican Lincoln Chafee, a congenital compromiser, is in a dead heat with a conservative primary opponent who calls him, accurately, the most liberal Republican in the Senate. Fellow Gang member John McCain has lent Chafee some support—campaigning with him and appearing in an ad—but Chafee increasingly sounds like a man from another era. "I don't understand these people who win saying, 'I'm going to be even more polarizing'," he tells NEWSWEEK.
Inside the halls of the Senate, the Gang of 14 still offers its embattled members shelter from the storm. "The doors close and suddenly Democrats and Republicans are talking to each other without fear it's going to be used against us somewhere," Chafee says. Last month the Gang met in Arkansas Sen. Mark Pryor's office to discuss the nomination of William Haynes II, an architect of the Bush administration's detainee policy and Bush's pick for a seat on the U.S. Court of Appeals for the Fourth Circuit. Most of the Democrats and at least three GOP senators—McCain, Maine's Susan Collins and South Carolina's Lindsey Graham—raised doubts about Haynes's nomination. As they counted heads, they must have wondered how the fall election will affect their numbers. "The consequences to this nation of not being able to reach across party lines ... are monumental," Graham says. "If that ever gets to be impossible, our days as a great democracy are numbered." Among Gang members, he's preaching to the choir, but the choir may soon be shrinking.
URL: http://www.msnbc.msn.com/id/14097560/site/newsweek/
A Rallying Cry for Democratic Populism
washingtonpost.com
A Rallying Cry for Democratic Populism
By Jeffrey H. Birnbaum
Take This Job and Ship It: How Corporate Greed and Brain Dead Politics Are Selling Out America
What would happen if the opposition party actually chose to oppose the one in power? Not just on the margins, but by rejecting outright the majority party's fundamental beliefs on trade and tax policy?
Sen. Byron L. Dorgan (D-N.D.) urges Democrats to take on Republicans in just that way in his new book,
Take This Job and Ship It: How Corporate Greed and Brain Dead Politics Are Selling Out America He makes a politically compelling -- if economically questionable -- case.
Dorgan, a master of partisan rhetoric, puts his debating skills to good use in spinning out anecdotes that make free trade and corporate tax breaks seem cruel to the average citizen. He clearly hopes to instruct fellow Democrats how to ride a populist wave if one were ever to form.
Democrats are deeply divided, of course, about whether to adopt his advice. Many prefer pro-business, pro-trade positions that distinguish them a little from the GOP, but not a lot. A growing number of others, however, are in Dorgan's radical camp. They think the way to finally win is to just say "No."
Depending on how low President Bush's job-approval ratings go, Dorgan might be on to something. His book is worth reading if only to see in detail how a reenergized Democratic Party might act.
Its first tenet would be to buck the economic consensus about the wisdom and inevitability of globalization. Dorgan disparages the elites' blind faith in markets to produce positive financial results. Instead, he concentrates on the human toll that cheap labor has exacted on low- and middle-income families.
He describes well the personal hardship felt by loyal workers when factories for such iconic U.S. products as Fig Newtons, Levi's jeans and Radio Flyer wagons moved abroad. After Huffy bikes closed its plant in Celina, Ohio, Dorgan writes, employees left shoes in empty parking spaces to deliver the message, "You can move our jobs to China, but you're not going to be able to fill our shoes."
The senator does more than tug the heartstrings. He recommends a litany of solutions, including repealing a tax break that encourages the outsourcing of jobs overseas, prohibiting imports from countries that abuse their workers and setting a ceiling on our trade deficits.
He would stop approving free-trade agreements of the kind that have flowed through Congress in recent years. Democratic and Republican administrations alike have embraced such pacts (NAFTA for North America and CAFTA for Central America, for example) as the only way for the United States to prosper over the long run in an interdependent international economy.
Dorgan rejects that thinking as injurious to American workers, the people whose well-being, he says, should be the focus of federal policy. The title of his final chapter says it all: "Flat World? No, Flat Wrong!"
To Dorgan, big corporations are the villains and labor unions the saviors. "I understand that big is not always bad, and small is not always beautiful," he writes. But, he adds: "If the shoe fits, wear it. And it damn well better be American-made."
He blames many of the nation's woes on the avarice of large multinational companies -- a tack that few politicians, dependent on campaign contributions, are willing to take these days. He also bashes lobbyists, which is for him a somewhat hollow declaration. His wife, Kimberly Olson Dorgan, is the chief lobbyist for the American Council of Life Insurers.
Dorgan heaps particular scorn on pharmaceutical and oil companies. He accuses drugmakers, for instance, of bending the country's laws in ways that hurt consumers and bloat their bottom lines. In response, he would repeal laws that bar the government from negotiating with pharmaceutical companies for lower prices and that prohibit the importation of less-expensive prescription drugs from countries such as Canada.
These are not the freshest of ideas, particularly coming from a liberal Democrat. But Dorgan delivers them with real sting. He claims, for example, that Tommy G. Thompson, then-secretary of the Department of Health and Human Services, told him privately that Dorgan was "right" to favor allowing prescription drugs to cross into this country -- a position at odds with that of Thompson's boss at the time, President Bush.
Dorgan also sounds what has become a major rallying cry for the political left -- a full-throated assault on the nation's largest retailer. "Wal-Mart," he writes, "is the poster child for what has gone so terribly wrong in this global economy." He complains that the company "trades American jobs for cheap foreign labor" and "pushes wages down here in the United States."
"Take This Job and Ship It" is Dorgan's effort to spread that kind of populism beyond his prairie home.
Birnbaum covers lobbying and politics for The Washington Post.
Frist Fails to Disclose Foundation Role
washingtonpost.com
Frist Fails to Disclose Foundation Role
By NANCY ZUCKERBROD
The Associated Press
WASHINGTON -- Majority Leader Bill Frist hasn't been following all the Senate's rules when it comes to disclosing details about his finances.
Frist and his wife are the sole trustees in charge of a family foundation bearing the senator's name, according to Internal Revenue Service forms. However, he has not been listing that position on his Senate disclosure forms, which are made public every year.
Annual forms detailing lawmakers' personal finances are supposed to list all positions members of Congress hold outside government. Those include unpaid posts such as serving as a director or trustee of a nonprofit.
When asked about the discrepancy by The Associated Press, Frist spokesman Bob Stevenson said the senator's office was unaware of the omission.
"It was recently discovered that Senator Frist's Senate financial disclosure forms may contain some inadvertent errors which are under review and will be promptly corrected by amending his financial disclosure," Stevenson said.
The family foundation had more than $2 million in assets in 2004, the last year for which a tax form was available.
Frist, who is considering running for president in 2008, set up the organization about 12 years ago. It did not have much money until 2001 when Frist inherited HCA Inc. stock from his mother.
Janne Gallagher, vice president and general counsel at the Washington-based Council on Foundations, said assets that go directly from an estate into a private family foundation, as in this case, are generally not taxed, unlike money distributed directly to heirs. She said once in the foundation, the money is largely tax exempt.
The foundation does not stand to benefit from a recently proposed buyout of HCA, because the HCA stock was sold off shortly after going into the foundation.
Frist is under federal investigation for selling other shares of HCA stock he owned last year around the time insiders were selling and when the stock price hit a 52-week high.
His foundation did not make charitable contributions in 2004 or 2003. However, but that was allowed under IRS payout rules that generally require annual donations because the foundation in 2002 made a large contribution of roughly $877,000.
That went to the Montgomery Bell Academy, a private boys' school in Nashville that Frist attended. The money, which went toward the school's endowment, has been the foundation's main charitable gift over the years.
There were about 30,000 private family foundations in existence in the United States in 2004, the last year for which data is available, according to the nonprofit Foundation Center, based in New York.
Frist and his siblings are vice presidents of another charitable foundation bearing their parents' names. Frist also failed to list his position with that foundation on his Senate disclosure form, and his staff said that would be amended as well.
He has disclosed on a Senate form his board position with World of Hope, a charity that gives money to causes associated with AIDS but which has come under scrutiny for paying consulting fees to members of his political inner circle.
___
On the Net:
Frist: http://frist.senate.gov/
Senate financial disclosure information: http://ethics.senate.gov/
Tax Cheats Called Out of Control
The New York Times
Tax Cheats Called Out of Control
By DAVID CAY JOHNSTON
So many superrich Americans evade taxes using offshore accounts that law enforcement cannot control the growing misconduct, according to a Senate report that provides the most detailed look ever at high-level tax schemes.
Among the billionaires cited in the report are the owner of the New York Jets football team, Robert Wood Johnson IV; the producer of the “Mighty Morphin Power Rangers” children’s show, Haim Saban; and two Texas businessmen, Charles and Sam Wyly, who the Center for Public Integrity found in 2000 were the ninth-largest contributors to President Bush.
Mr. Johnson and Mr. Saban, who are portrayed as victims in the report, are scheduled to testify today before the Senate Permanent Investigations subcommittee. They are expected to say that professional advisers assured them their deals to avoid taxes were more likely lawful than not. The Wyly brothers told the committee that they would invoke their Fifth Amendment right against self-incrimination and thus were not called to testify. The report characterizes them as active participants in tax schemes.
Cheating now equals about 7 cents out of each dollar paid by honest taxpayers, as much as $70 billion a year, the report estimated.
“The universe of offshore tax cheating has become so large that no one, not even the United States government, could go after all of it,” said Senator Carl Levin, the Michigan Democrat whose staff ran the investigation.
Senator Norm Coleman, the Minnesota Republican who is chairman of the subcommittee, adopted the minority report on Sunday as the product of the full committee.
The report details how the Quellos Group, a tax shelter boutique based in Seattle, “concocted a tax shelter” using $9.6 billion “worth of fake securities transactions that were used to generate billions of dollars of fake capital losses.”
Senator Levin said that when investigators asked for trading records they were first told the trades were private, over-the-counter transactions. He said investigators asked for trading tickets or other evidence of who owned the $9.6 billion worth of stock and were told the stocks were never owned by the parties involved.
“They just wrote down numbers on paper and claimed losses,” he said. “It was just like fantasy baseball, except the taxes not paid were for real.”
Quellos, in a statement, said, “we fundamentally disagree with the report, which presents a one-sided view.” It said the transactions, which the Senate committee describes as fabrications, were real and involved “a significant possibility of economic gain and loss.”
The investigation, which took 18 months, involved 74 subpoenas, 80 interviews and the collection of more than two million documents, and yet Senator Levin said “the six cases we present are just examples, just a pinhole look.”
The 400-page report recommends eight changes, some of them aimed at going after the law and accounting firms, banks and investment advisers that the report says enable tax schemes that rely on complexity, secrecy and compartmentalizing information so that advisers can claim they had no idea that the overall transaction was a fraud.
“We need to significantly strengthen the aiding and abetting statutes to get at the lawyers and accountants and other advisers who enable this cheating,” Senator Levin said, adding that “we need major changes in law to stop the use of tax havens” by tax cheats.
It also recommends new rules that strip away the underlying legal presumptions that make offshore tax havens like the Cayman Islands, Nevis, the Isle of Man and Panama attractive places for Americans to hide assets and income from the Internal Revenue Service.
Senator Levin said the law “should assume that any transaction in a tax haven is a sham.”
He said that during the investigation he grew angry as he learned how common cheating had become and how existing government rules aided tax cheats. He said that complex schemes were broken into discrete pieces, allowing professional advisers working on each piece to assert that they had no idea that, taken as a whole, a scheme was improper.
“I get incensed by people who use tax havens to not pay their taxes while the average guy has to pay his taxes because they are taken out of his pay before he gets it,” he said.
Both Mr. Johnson, the football team owner and scion of the Johnson & Johnson health care fortune, and Mr. Saban, the television mogul, are portrayed in the report as victims.
The two men, through representatives, said yesterday that they relied on professional advisers who told them the transactions were lawful, and that they were now settling with the Internal Revenue Service.
Mr. Johnson, known as Woody, told Senate investigators two weeks ago that to buy the Jets in 1999 he had to sell assets, incurring the 20 percent tax on long-term capital gains in effect at the time. He said that a way to defer the tax was proposed by Larry B. Scheinfeld, who had been his accountant at KPMG until he joined Quellos, where he worked closely with Chuck Wilk, a tax lawyer.
The technique involved a complex set of circular transactions using what the Senate report characterized as sham corporations in the Isle of Man with shell corporations given names like Jackstones. Their ownership was kept secret.
“Ain’t capitalism great!” Mr. Wilk wrote to Mr. Scheinfeld in an e-mail message extolling the tax benefits of the Johnson deal. Three weeks later, when the deal was set, Mr. Scheinfeld wrote back: “I just hope Woody doesn’t get cold feet or have the I.R.S. select his return for an audit!”
The report details a scheme created for Mr. Saban to avoid more than $300 million in taxes from sale of his half interest in the Family Channel and related properties.
Mr. Saban told Senate investigators that he never understood the transactions but undertook them after asking two questions of Mr. Wilk and his personal tax lawyer, Matthew Krane.
Mr. Saban said he asked whether the deals were legal and whether a major law firm would certify them as proper. The two lawyers, Mr. Saban said, answered “yes to both,” so he went ahead.
Later, when Mr. Saban learned that he had paid $54 million in fees to Quellos; Cravath Swaine & Moore, a New York law firm; and others for what turned out to be what the report described as fake transactions, he said he felt “misled, lied to and cheated.”
Lewis R. Steinberg, who as a Cravath Swaine partner helped design the deal and wrote an opinion letter attesting that it was more likely than not to work as a tax shelter, told Senate investigators last week that he relied on assurances from Quellos and Mr. Johnson that real transactions took place, not fake trades. Mr. Steinberg, who is now at UBS Securities, another firm named in the report, is a prominent tax lawyer and in 2004 was chairman of the tax section of the American Bar Association.
The report also dissects deals by the Wyly brothers of Texas, showing how they made at least $190 million through stock option exercises offshore but had yet to pay taxes on most of the money. They then borrowed against their offshore accounts to buy jewelry, pay for portraits of family members, buy homes and operate properties named Rosemary’s Circle R Ranch, LL Ranch, Stargate Horse Farm, Cottonwood Galleries and 36 Malibu Colony.
Senator Levin said he might propose limiting or barring the transferring of executive stock options to others, as well as more disclosure when they are exercised.
The report says that Credit Suisse First Boston, Lehman Brothers and Bank of America “all knew that the offshore entities” for which they made trades were associated with the Wylys, but ignored rules requiring disclosure of these transactions and helped them hide the true ownership of the assets. Only when Robert M. Morgenthau, the New York District attorney, issued subpoenas in 2004 did Bank of America close the Wyly accounts.
William Brewer, a Dallas lawyer for the Wylys, said that while the Senate report “intends to present a balanced view, the committee report is reflective of a number of misunderstandings.”
“The Wylys believe they have paid all taxes due,” he added. “And in any event, as the report makes clear, the Wylys were counseled by an armada of lawyers, brokers, financial professionals and offshore service providers to ensure that they were at all times fully meeting their obligations.”
Can You Support the Troops but Not the War? Troops Respond
Huffington Post
Paul Rieckhoff
Can You Support the Troops but Not the War? Troops Respond
Four years into the wars in Iraq and Afghanistan, and thirty-some years after Vietnam, this country is still wrestling with a relatively straightforward question: "Can you support the troops, but not the war?"
I've made my stance on the issue pretty clear. I think you can do both. I write about this topic (and others having to do with the politics of the Iraq war) extensively in my new book, Chasing Ghosts.
Regardless of what you think of this war - right, wrong or indifferent - we all have a moral obligation to take care of the men and women who serve. When it comes to issues such as VA funding or adequate body armor, it's time to put ideological differences and partisan bickering aside and just get the job done. "Support the Troops" is not some jingoistic rallying cry, but rather a clear imperative that should be separate from your feelings for or against the war.
As an Iraq Vet, I have always been treated well by all Americans--whether they are for this war or not. And that is tremendous progress from where this country was during Vietnam. My generation of veterans have the Vietnam vets to thank for the warm welcomes we receive today. When Vietnam vets came home in the 60's and 70's, they faced second battle. They returned home to face a nation filled with frustration and anger about a war, that was directed at them personally. And that was wrong. Vietnam was not their fault. But over time, they worked hard and taught this country to separate the war from the warriors. It is one of the most important lessons America learned from Vietnam.
So what do some other veterans of Iraq and Afghanistan think about the same question? We put the question out to our member veterans. Here's a sampling of their responses from the IAVA blog:
Perry Jefferies served as a First Sergeant in Iraq:
"I think so, but this question has become a minefield set for political purposes and tends to engender more acrimony than support for anything...I think that often neither side has really thought through what they are saying."
Marissa Sousa spent a year in Iraq as a Staff Sergeant in a tank unit:
"Supporting the troops is as American as apple pie, or as baseball. I think the best supporter is the one that questions why the troops are sacrificing their lives, their buddies, and their families, to fight. The best supporter is the one that understands the troops, and fights for their rights both on the ground and on their return."
Monroe Mann is an actor and National Guard Soldier who returned last year after a year in Iraq:
"I think it is completely possible to be against the war, but support the troops...None of the troops decided of their own volition to start the war. They were simply doing a job. I think most Americans realize this."
Ray Kimball served as an Army Captain in Operation Iraqi Freedom, and mentions Cher, Henry Rollins and others who break the stereotype: "It seems contradictory, but I say yes - you can be against the war, and still support the troops. 'Support' doesn't mean a bumper sticker, and it doesn't mean an endless litany of praises and recitation of the virtues of those in uniform. It means real, concrete actions to support those tasked with carrying out a dirty and difficult task."
Keith Klewe served in Afghanistan, and had this to say: "I'm 100% for the troops, whether they are U.S. troops, Coalition troops or Iraqi and Afghan troops. I'm all for fighting for something you believe in. I believe in the individual motivation of all soldiers to do the right thing, support their country, make things better. At the same time, I'm 100% against war with no objective."
Florida GOP Turned Back on Harris
Florida GOP Turned Back on Harris
By BRENDAN FARRINGTON
Associated Press Writer
TALLAHASSEE, Fla. (AP) -- The state Republican Party bluntly told Rep. Katherine Harris that she couldn't win this fall's Senate election and that the party wouldn't support her campaign, a letter obtained Monday by The Associated Press shows.
Party Chairman Carole Jean Jordan made a last-ditch attempt in the confidential May 7 letter to force Harris out of the race for the nomination to challenge Democrat Sen. Bill Nelson. But the next day, Harris turned in paperwork to get her name on the Sept. 5 Republican primary ballot.
The letter came as Gov. Jeb Bush was trying to get state House Speaker Allan Bense into the race. Bense announced later that week that he would not enter the race.
Harris rose to national prominence as Florida's secretary of state during the bitter presidential election recount in 2000 that gave the White House to George Bush. She was elected to the U.S. House in 2002.
The letter was also signed by national committeewoman Sharon Day and national committeeman Paul Senft.
Harris contended Monday that all three were pressured into signing the letter by "the party elite."
"I knew the background; I knew that pressure was applied," she said. "I knew the motivation and I knew the players, and I knew they had no choice."
The letter said: "Katherine, though it causes us much anguish, we have determined that your campaign faces irreparable damage. We feel that we have no other choice but to revoke our support.
"The polls tell us that no matter how you run this race, you will not be successful in beating Bill Nelson, who would otherwise be a vulnerable incumbent if forced to face a stronger candidate," it said.
Since the letter was written, three political newcomers have entered the race against Harris: LeRoy Collins Jr., son of a former Florida governor; Peter Monroe, a developer who helped manage the government's savings and loan bailout; and lawyer William McBride.
The state Republican Party confirmed the letter's contents Monday. In a statement, Jordan said she was "disappointed" that the private letter had been made public but added that "our concerns about the race and Congresswoman Harris' campaign still exist."
In a Quinnipiac University poll released Thursday, Harris had a comfortable lead in the GOP primary race but was behind Nelson by 37 percentage points in a general election matchup.
The letter to Harris listed major obstacles, including coverage of campaign contributions she took from a defense contractor, Mitchell Wade, who later pleaded guilty to bribing another congressman.
Harris has said that she wasn't aware of the illegal contributions and that she was only trying to bring high-wage jobs to her district when she tried to help Wade's company, MZM Inc., get a federal contract.
Senate Republicans Hope Flurry of Bills Will Assuage Voters
ABC News
Senate Set for Flurry of Bills
Senate Republicans Hope Flurry of Bills Will Assuage Voters
By LAURIE KELLMAN
The Associated Press
WASHINGTON - A Senate famous for its "deliberative pace" is hoping to rush out bills this week bolstering pensions, raising the minimum wage and cutting taxes before departing the Capitol and shifting their re-election campaigns into high gear.
Which of those measures advance this week will determine how much Republicans can boast about as they seek re-election, and to what degree Democrats can portray them as a do-nothing Congress undeserving of continued control.
The House adjourned in the wee hours of Saturday morning for a five-week vacation, passing pension reform and a bill combining a $2.10 hourly raise in the minimum wage over two years with a large cut in inheritance taxes next decade for multimillionaire families.
Most sweeping is a bill that would help preserve the traditional employee-based pension system for the nation's 44 million retirees, tightening controls on companies that fall behind in their contributions and giving special repayment breaks to the airline industry.
After reaching an agreement that took five months to negotiate, the House passed the measure, 279-131, Friday night. Its fate in the Senate is uncertain after Majority Leader Bill Frist, R-Tenn., and House Republicans dropped a crucial sweetener, a plan to extend certain business and middle-class tax breaks.
Those tax breaks are instead now attached to a package raising the $5.25 minimum wage and lowering future inheritance taxes an election-year gambit in which GOP leaders hope Democrats will allow the latter in order to win the former.
Senate Minority Leader Harry Reid, D-Nev., branded the proposal "political blackmail that reeks of desperation."
"It should fail," Reid added, but he said he said he would do everything possible to block the bill. The measure passed the House on Saturday by a vote of 230-180.
Better prospects await a bill to expand oil and gas development in the east-central Gulf of Mexico, opening up 8.3 million acres for drilling. The House has approved a broader measure that also would lift a 25-year federal ban on new drilling along the Atlantic and Pacific coasts.
The proposal is aimed at decreasing natural gas and oil prices.
The Senate also will try to pass a $427 billion spending bill for the Pentagon that combines new funding for the war in Iraq, money to procure a fighter plane beset by cost overruns and a bucketful of pet projects for defense contractors in lawmakers' home states.
The House passed its Pentagon spending bill in June. Leaders in both chambers want to combine them into one measure signed into law before the November election.
The minimum wage/estate tax bill is H.R. 5970.
The pension bill is H.R. 4.
The offshore drilling bill is S. 3711.
The military spending bill is H.R. 5631
On the Net:
The bills can be found at: http://thomas.loc.gov
Senate Is Close to Passing Bill for Gulf Drilling
The New York Times
Senate Is Close to Passing Bill for Gulf Drilling
By MICHAEL JANOFSKY
WASHINGTON, July 31 — The Senate moved closer Monday to passing a bill that would open vast new areas of the Gulf of Mexico to oil and gas drilling, voting to cut off debate before a final vote, expected no later than Wednesday.
The vote was 72 to 23, well over the 60 votes needed to overcome a filibuster and a clear sign that the bipartisan bill had enough support to move it into negotiations with the House.
But that may be the only thing that is clear about the measure’s future.
The House has passed a drilling bill that would open the nation’s entire coastline to drilling, a prospect that sponsors of the Senate bill regard as too ambitious.
President Bush has expressed eagerness to sign a new drilling bill into law, and a failure by the House and the Senate to agree on a compromise would probably doom all prospects for major energy legislation this year. Yet for now, the chief sponsors of the bills do not sound as if a compromise is imminent.
Senator Pete V. Domenici, chairman of the energy committee and the Senate bill’s lead sponsor, told reporters before Monday’s vote that he was confident that negotiations would produce a final bill that more closely resembled the Senate’s version than the House’s.
“In due course, we’ll argue for opening up more, then more, then more, then more,” Mr. Domenici, Republican of New Mexico, said at a news conference in which he seemed to be directing his remarks more to House negotiators than to reporters.
“This is the first giant step,” he added, a reference to ending federal bans on offshore drilling that have been in effect for 25 years. “We’re breaking precedent, getting it started. We’ll take one big step at a time, and the next step will follow easily if this becomes law. I hope we can convince the House of that.”
But Representative Richard W. Pombo, chairman of the House natural resources committee and chief sponsor of the House drilling bill, said he did not accept Mr. Domenici’s approach to resolving the differences.
“Obviously, I want to get as much as we possibly can in new domestic energy,” Mr. Pombo, Republican of California, said in an interview.
Citing disruptions in oil and gas production caused by Hurricanes Katrina and Rita and the ensuing rise in prices, Mr. Pombo said it would be ill advised for the nation to limit new development of resources to the gulf.
“We need to diversify where our domestic energy comes from,” he said. “We can’t continue going back to the gulf with greater dependence as the only source of new energy. Other places, onshore, are in decline. We need to look at other places for our new sources of energy.”
The Senate bill, focusing on an area in the gulf known as Lease Sale 181 and 181 South, is notable for three elements. It would allow the gulf states affected by last summer’s hurricanes — Texas, Louisiana, Mississippi and Alabama — to receive a share of the energy production royalties that now go entirely to the federal government. It would provide protections for Florida — the only state to get them — that its senators insisted upon in exchange for support.
And it would open for energy development 8.3 million acres, much more than the 2 million the Bush administration had sought to open for a five-year period, 2007 to 2012, and considerably larger than the 2.9 million acres identified in a bill introduced early this year by Mr. Domenici and Senator Jeff Bingaman, Democrat of New Mexico and the ranking Democrat on the energy committee.
That bill began to change after Senator Mary L. Landrieu, Democrat of Louisiana, and other gulf state senators introduced a measure intended to capture royalties from new drilling. Mr. Domenici and Mr. Bingaman resisted supporting it at first, favoring their more narrowly written measure, which they judged to be the only bill capable of winning more than 60 votes.
But as it became apparent that Ms. Landrieu could make good on a promise to deliver substantial Democratic support for a drilling bill that included a revenue split with the states, Mr. Domenici embraced the change. In the vote to block the filibuster, 20 Democrats voted with 52 Republicans, while 21 Democrats, one independent and one Republican, Senator Olympia J. Snowe of Maine, voted against blocking it.
Once the revenue-sharing plan and protections for Florida were written into the bill, Mr. Bingaman withdrew his support and on Monday voted against limiting debate.
The House bill, which was approved closely along partisan lines in June, also includes a revenue-sharing plan and new powers for states to control energy production in their coastal waters. Under current policy, all the waters beyond three miles in most places are under federal control.
Bush authorizes graphite export to China
Reuters
Bush authorizes graphite export to China
WASHINGTON (Reuters) - President George W. Bush on Monday authorized the export to China of 2 million pounds (907,200 kg) of bulk graphite for making plastics and said he did not believe it would prove detrimental to the U.S. space launch industry.
Bush notified the leaders of the U.S. House of Representatives and the Senate of the move in a letter.
He said he had certified that the export of the graphite and processing equipment "is not detrimental to the United States space launch industry. He also said the material and equipment would not measurably improve China's missile or space launch capabilities.
In this case, Chinese firms plan to use the bulk graphite, a refined form of carbon, to make electrodes, dies and molds that will in turn be used to produce plastic, rubber, copper, tin and iron components.
The deal required special review by the U.S. government because graphite can also be used to produce the nozzle for a solid-rocket motor, which can be used on a long-range intercontinental ballistic missile or to add power to a space launch vehicle, according to defense analyst John Pike.
Pike said China's aggressive development of rockets to launch satellites into space had aroused concerns in recent years among U.S. launch companies, which have been struggling to stay afloat in a flagging commercial market.
He said there was "certainly a lot of sensitivity in the U.S. launch industry about Chinese launch competition because it's just not that big of a market, and the Chinese are cheaper."
In the end, Pike said, U.S. officials probably realized China already had access to the technology used in the graphite processing equipment, or could easily get it elsewhere.
"If we don't sell it to them, they'll get it from the French," Pike said.
U.S. defense analyst Loren Thompson said traditional trade barriers with China were falling rapidly.
"Republican administrations traditionally have been reluctant to sell militarily sensitive technologies to any communist regime, however the Bush administration needs China for various diplomatic initiatives and China needs America as an export market," said the Lexington Institute analyst.
"The Bush administration is learning that in a globalized economy there isn't much that you can withhold from countries that have bustling economies," he said.
The United States has large and growing trade ties with China, but U.S. lawmakers remain uncomfortable about exporting any sensitive technologies to the communist country.
Earlier this month, lawmakers threatened to hold up the sale of F-16 fighter jets to Pakistan unless the deal was modified to include tough safeguards on any possible transfer of technology to China.
(Additional reporting by Andrea Shalal-Esa)
US general who oversaw detentions retires with honors
Reuters
US general who oversaw detentions retires with honors
By Will Dunham
WASHINGTON (Reuters) - Maj. Gen. Geoffrey Miller, who commanded the Guantanamo prison and helped shape detention practices at Abu Ghraib prison in Iraq, retired from the U.S. military on Monday with a top honor and praise from the Army.
Miller headed the prison camp for foreign terrorism suspects at the U.S. naval base at Guantanamo Bay, Cuba, from 2002 to 2004 and was sent to Iraq in 2003 to help extract more information from prisoners there. He oversaw all detention operations in Iraq for nine months in 2004.
Human rights activists have accused Miller of permitting widespread abuse of prisoners and of importing the harsh techniques used at Guantanamo to Iraq. They contend that Miller's influence helped create the conditions for the sexual humiliation and abuse of Abu Ghraib prisoners.
"This is yet another case where you have somebody who is integrally involved in setting the stage for abuse -- implementing tactics that people are now being prosecuted for -- and rather than being held accountable, he's getting honors," said Amnesty International official Jumana Musa.
Military investigators last year recommended that Miller be admonished for failing to monitor and limit the "abusive and degrading" interrogation of a prisoner, but the general who headed U.S. Southern Command rejected the recommendation.
The Army inspector general's office also cleared Miller.
This year, Miller initially invoked his right not to incriminate himself in the trials of two U.S. soldiers charged with abusing Abu Ghraib prisoners with dogs.
He later did testify in one trial, telling jurors in May he never suggested using military dogs in interrogations. The soldier, who had sought to show that top officers were responsible for the abuse, was convicted.
During a ceremony presided over by Gen. Richard Cody, the Army's No. 2 officer, Miller was presented with the Distinguished Service Medal, the Army's fourth-highest award, before a crowd of 200 people in the Pentagon's Hall of Heroes.
Cody called Miller a "role model, innovator and leader" who was asked to "tackle two of the toughest jobs in the global war on terror."
The Army said Miller has agreed to testify before Congress about detainee issues if he is asked.
Monday, July 31, 2006
State Department hid costs of Iraqi projects
Reuters
State Department hid costs of Iraqi projects: paper
WASHINGTON (Reuters) - The State Department agency in charge of $1.4 billion for reconstruction projects in Iraq used an accounting shell game to hide cost overruns and failed to tell Congress about schedule delays, The New York Times reported on Sunday.
A report by the independent Special Inspector General for Iraq Reconstruction said the U.S. Agency for International Development listed project overruns as overhead or administrative costs.
USAID is the agency is charge of administering foreign aid and began working on Iraq reconstruction soon after the 2003 invasion began.
The inspector general's report did not give details on all projects being conducted under the $1.4 billion budget, but noted several examples including a children's hospital in Basra and a power station in Baghdad.
Bechtel, the contractor in charge of the Basra hospital, said in April construction costs would be $98 million, up from an original budget of $50 million, due to escalating costs for security and other problems. USAID pledged to cut contractor overhead, but the inspector general found no effort to do that.
In a report later that month to Congress, the agency reported the cost as $50 million with the rest reclassified as "indirect costs."
Bechtel also told USAID in March the project was 273 days behind schedule, but in its April report the agency mentioned no delay problems to Congress.
Joseph A. Saloom, the newly appointed director of the reconstruction office at the U.S. Embassy, said in a letter he would take steps to improve the reporting of the costs of reconstruction projects in Iraq.
Sunday, July 30, 2006
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