Pollard and Tuna Tartare On The Menu at Biden's

Last night, more than 140 Jewish community leaders, members of Congress, and administration officials gathered at Vice President Biden's home at the Naval Observatory to commemorate the Jewish New Year, Rosh Ha Shanah. The usual suspects like Abe Foxman, head of the ADL, were there.

The Kosher food selection included: North African meatballs, petite turkey slider on homemade brioche with cranberry aioli, classic tuna tartare presented in a mini wonton cone, wasabi mousseline, sweet tomato jam tartlets, and crisp vegetable ceviche shooters. The desert table was festooned with French macaroons, apple latkes served with a honey creme, petite honey and walnut cakes, and mini chocolate cupcakes with lemon frosting.

The party occurred a midst a flap over Biden's comments about the possible release of convicted spy Jonathan Pollard. The New York Times reported several days earlier that he said,"President Obama was considering clemency, but I told him, ‘Over my dead body are we going to let him out before his time. If it were up to me, he would stay in jail for life. The Israeli newspaper Haaretz later reported that he claimed to be misquoted.

Something good has come out of Biden inserting his foot in his mouth. The Jewish community has coalesced around Pollard. Biden has agreed to meet with a small group of Jewish leaders to discuss the release. Along with arguing for the release, the Jewish community possibly should pursue a different tactic and ask for the reason that the intelligence community is so opposed to his release. With the entire intelligence community united in their opposition, there must be more to his transgressions than what was publicly released during his case. Even if the the spooks can not divulge the entire basis for their antagonism because it is classified, maybe they can provide some color.

Occupy Philadelphia Pictures

I stopped by the Occupy Philadelphia protests in Dilworth Plaza, next to City Hall and across from the Ritz Carlton Hotel. The more than 600 protesters at 11 am were sharing space with the homeless people that typically stay there. They were demonstrating against Congress, bank bailouts, the Troy Davis execution, the wars in Iraq and Afghanistan, healthcare, and the Supreme court Citizens United decision. My favorite signs were "Wall Street is Dog Meat," "When Did Socialism Became a Dirty Word?" "Do You Feel The Trickle Down?' and "Phire the Phat Man," which referred to Eagles Football Coach Andy Reid. Police presence was not overwhelming. The mostly white, young crowd was entertained by a pick up band consisting of a bass, trumpets, guitar and drums.

One enterprising lawyer could not resist the opportunity to capitalize on the protests. He hired workers to carry signs directing people to a website if they were disaffected stock brokerage clients.

They should be there all night. Unlike the city of Seattle, Philadelphia Mayor Nutter had agreed to let them sent up a tent city in a designated area.

The media has portrayed the protesters as unemployed and estranged from society. I did not find that. Most of the people that I interviewed had a decent job and were taking a personal or vacation day. Quite a few were licensed healthcare professionals that worked at local hospitals.Well known African American activist Michael Coard and Jeremy Burton, the education and community services coordinator of the Philadelphia regional office of the Pennsylvania Human Relations Commission were two of the lawyers that I talked to.

Many are committed for the long haul. One said, "I am only leaving at 6 tonight because I have a rehearsal dinner. My wife would kill me if I did not go. I will be back tomorrow."

One English protester reminded me that we were lucky to live in America. He said,"Protests like these have been banned in England."

Defending Skybridge's"Mooch" Scaramucci from Bloomberg and Reuters

I need to respond to the recent spate of negative publicity received by Anthony Scararmucci, managing partner of Skybridge Capital and founder of the SALT (Skybridge Alternatives) hedge fund conference. Bloomberg's Edward Robinson placed the hatchet squarely in Scaramucci's back. Reuters Felix Salmon followed up  by divulging a petty fight that happened a long time ago.  

Both authors seemed hell bent on badmouthing Scaramucci because he is made millions without seeming to possess any discernible talents but schmoozing. They lament the paucity of his investment talent but forget to mention that he dodged the Madoff, Starr, and Stanford frauds. Robinson glosses over the incredible deal that he engineered to acquire Citigroup hedge fund assets for next to nothing. While Bloomberg (the media outlet) typically glorifies conspicuous consumption, they resent Scaramuuci's charity showboating and extravagant marketing expenditures in this article. 

Robinson sticks it to Scaramucci coming and going. He also hectors him for his lack of billions. He notes that Scaramucci, who collects 1.5% running a fund of funds, is not as rich as his hedge funds colleagues that charge 2/20. 

Scaramucci is a schmoozer extraordinaire, a skill that should not be dismissed lightly. As someone whose take home pay depended on jawboning clients, I can tell you it is a lot harder than it looks and requires more intelligence than you think. Your work is not done when the cocktail party ends.You still need to execute. 

Robinson focused a third of the article on minor failures in Scaramucci's life that occurred over twenty years ago. Spoiled by Mark Zuckerberg and Bill Gates, the media now thinks you are a failure if you are not worth a billion dollars by college graduation. Robinson seems to forget that JP Morgan CEO Jamie Dimon was fired from Citigroup, the late Senator Kennedy was expelled from Harvard, and Mediq terminated US HC founder Len Abramson.

For Salmon, Scarmucci's high crimes and misdemeanors was vigorously complaining aboutan unflattering article about him. The retelling of this ancient incident probably reveals more about Salmon than Scaramucci.

A sense of irritation at the lavishness of the conference emerges from the article by Bloomberg. The article never discloses that they are competitors of Scaramucci since Bloomberg also runs conferences, which are not as good. 

As a frequent conference participant, I appreciated the effort and expense that went into the conference's preparations. Quite simply, the SALT conference is the best conference that I ever attended. Speakers included former President Bush, former Secretary of State Colin Powell, former British Prime Minister Gordon Brown, former Senator Chris Dodd, and Presidential adviser David Axelrod. It was at this conference that former President Bush disclosed his reaction to the capture of Bin Laden. Star economist Nouriel Roubini pontificated, SAC hedge fund founder Steve Cohen whitewashed, Third Point's Daniel Loeb evangelized, and Citadel's Ken Griffin trashed Obama. 

The lineup of illustrious speakers was not what made this conference great. Unlike most investment conferences, this was a conference with a heart. Representatives from various charities such as Wounded Warrior Project and Charity: Water shared stage time with the financial and political luminaries. Generals candidly communicated the current conditions of American troops in Iraq and Afghanistan. 

What both articles did not tell you is that Scaramucci is genuinely a nice guy. Although everyone wanted a piece of him, Scaramucci took the time to hug me hello. (Robinson accurately depicted Scaramucci's love of physicality.) He told that I was "beautiful," which was a total lie, but music to this middle aged lady. This personal gesture was all the more extraordinary since I was an unknown, but clearly not well heeled or well-connected. 

I am not going to defend the fees attached to the fund of funds structure or Skybridge's performance. As an investment professional, I found that it was not always possible to sell clients the product that is best for them. Believe it or not, they often gravitated towards high commission products. The word hedge fund was magical to many and they could not be dissuaded from investing. 

Do not believe everything you hear. Scaramucci may not be perfect, but he is a mensch. 

Saving the SEC by Outsourcing Its Investigations

With the SEC admitting defeat and announcing a change strategy to target negligence instead of  the harder to prove fraud, I thought it was a good time to discuss my idea of saving the SEC by outsourcing its work. I am developing  my idea with the help of the community reporting site, Spot.us.

Private lawyers would be allowed to present a SEC staffed tribunal with customer complaints or credible allegations of violations of securities law. The tribunal would then put it to a vote to decide if the investigation by the private lawyers should proceed.. Once the investigation is authorized, the lawyers would be armed with full investigative powers of the government including subpoena. Upon the finding of wrong doing,  the staff tribunal would impose punishment. The lawyers would be paid from the fines imposed.

Everyone knows about the failure of the SEC to detect the Madoff fraud. More recently, SEC attorney Darcy Flynn blew the whistle and revealed that the SEC has hindered investigations and broken National Archive rules by destroying documents that are required to be kept for 25 years.

 My personal experience of  trying to inform the SEC about a potential fraud might be more illustrative of the reasons that government oversight of the securities markets is not enough. When I discovered several years that serial con man Glenn Manterfield of England had registered the hedge fund Lydia Capital that he co-founded with Evan Andersen with the SEC, I immediately contacted and alerted them that he had stolen money from me and clients of mine.

I also informed them that he lied about his criminal history on the SEC  form ADV. The form asks about the applicant's criminal history and requires registrants to update the SEC about any developments. He had checked that he had no criminal history and had not informed him of his latest arrest, which occurred after his registration. The SEC indictment later said he lied about his extensive criminal record.

Although we regularly throw around the term international financial markets, the SEC has not adjusted to the globalization,. The SEC can only access American fingerprint databases so there was no way to discover Manterfield's British criminal history. A SEC lawyer told me that they had to get special  permission to make a transatlantic call so they have no regular ability to check on international applicants for registration. It is negligent to register international applicants if you can not run the proper background checks.

Requiring hedge funds to register was one of the knee jerk responses of Congress to the Wall Street bailouts, but it is not the right answer. No one contemplated the pitfalls of registration. Manterfield's bone chilling retort to why he registered shows the downfall of this lack of foresight - "We were just two guys with an idea. The SEC registration gave us credibility."

When the SEC did not proceed with an investigation, I contacted the office of William Galvin, the Secretary of the Commonwealth of Massachusetts. After Galvin's office started the prosecution, a light finally went on at the SEC and they took over the prosecution. They later apologized to me for ignoring my tip.

The SEC closed Lydia and appointed a receiver to recover assets. They imposed a lifetime ban and a $2.91 million fine on Manterfield for defrauding 60 investors of $34 million. 

Unfortunately, this was not the end of the story. Even though I warned the SEC that Manterfield could be running multiple cons at once, they didn't check. I complained again to Galvin's office. They issued a cease and desist order for his second entity, Osiris FX.  The US Attorney of Massachusetts, which rarely prosecutes securities violations, declined to prosecute even though they had the cooperation of the British police.

Without my intervention and a little luck, Lydia Capital could have defrauded investors for years. Lydia Capital happened to be headquartered in Boston. Massachusetts' Galvin is one of the few state law enforcement officials aggressive about prosecuting securities crimes. Anywhere else in the country, my warnings would have also been ignored by the state authorities.

Galvin stepping in might have saved the day for Lydia's investors but it is not a permanent solution. We need cops patrolling the securities beat. From my varied interactions with the SEC, I do not think that they are up to the job. After SEC investigator Gary Aguirre was fired after he vigorously pursued Morgan Stanley CEO John Mack too aggressively, they may no longer feel safe challenging big names on Wall Street. The revolving door between the SEC and Wall Street may also play a role in their lackadaisical attitude.

Outside lawyers need to step in and supplement the investigative staff of the SEC, We already outsource some aspects of  law enforcement such as bounty hunting and allow private contractors like Blackwater defend our country.  Private SEC investigations would be the next logical step.

If you have any doubts, remember "Inside Job" direct Charles Ferguson's Oscar acceptance speech. He said, "Forgive me, I must start by pointing out that three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail - and that's wrong."

Former Defense Secretary Gates Talks Israel

Former Secretary of Defense Robert Gates, while at the National Constitution Center in Philadelphia to receive the Liberty Medal, criticized Israel again, but is opposed to the unilateral declaration of of Palestinian statehood at the United Nations. Gates, who is the first US Secretary of Defense to visit Ramallah, said, "Israel is now alone in the Middle East. Israel has made mistakes. They are having trouble with Egypt. They have alienated Turkey. They assassinated a Hamas leader in the United Arab Emirates."

He blamed their isolation on the settlements. He explained, "The Arabs are angry about the settlements. Every American President  has urged stopping the settlements because each new settlement makes it harder to define the borders."

He dismissed concerns about the right wing coalition of Israeli Prime Minister Bibi Netanyahu. "I have known Netanyahu since 1990: Barak since he was chief of staff of the Army. I was with Carter at the Camp David Talks. In my five decades of dealing with Israel, I have seen that peace can only take a major step forward on the Israeli side with conservative leaders -(Menachem) Begin, (Yitzhak)Shamir, (Ariel)Sharon before his stroke."

Gates, who has taken the oath to protect the Constitution 7 times, believes that there can only be progress in the peace negotiations "with aggressive American leadership."

When asked about the upcoming vote on the  unilateral declaration of Palestinian statehood, Gates responds, "You have to ask if this advances or hurt the cause of peace. It hurts."

He continued, "Which set of  Palestinians  does this represent? Is it the West Bank, where the Palestinian Authority is in control and security forces have been trained by the US and cooperate with Israel. Or Gaza, which wants the destruction of Israel."

As for Hezbollah, he reminded the audience that "they had more rockets than most countries."

Confessions of an NHL Player

I had a chance to catch up with some of the Philadelphia Flyers at Philadelphia Style Magazine party for the Nicole Miller cover. (Nicole Miller arrived on a motorcycle.) Team captain Chris Pronger and players Matt Carle, Wayne Simmonds, and Max Talbot were there.

After longtime Flyers executive Fred Shabel told me to go over, I talked to defenseman Matt Carle. He is one of the nicest professional athletes that I ever met and I have met many. He deserves a gold star for patiently answering my questions.

Carle is originally from Anchorage, Alaska. No, he does not know Sarah Palin, which he says is the first question that everyone asks him when they find out where he is from. As you cam imagine, he spent his entire childhood on skates because "what else is there to do in Alaska."

He now lives in South Jersey with his wife of one year and two dogs. He likes South Jersey because "it is near the stadium and close enough to come into town for dinner." His wife was not with him, but she is a lucky woman. Carle did not look at another woman all night. (The same can't be said for the single Max Talbot, who was busy collecting the phone numbers of beautiful women all night.)

Carle laughed when I asked him if he had all his teeth. (I had just come from the dentist.) "Knock on wood. I have come close to losing them a couple of time," said Carle. He pointed to Talbot and said "he has lost some of his."

I asked Carle how he felt about being traded to the Flyers. "When I was traded, it was bittersweet," he explained. "On one hand, I was rejected by my old team, but on the other hand, I was coming to the Flyers, which was number 2 in the league."

I expected Carle to regurgitate the standard player's feeling about management when we talked about Flyers Owner Ed Snider. Instead he delivered heartfelt platitudes. "Ed Snider really cares about his team and esprit de corps. Other team owners may talk about it, but he really follows through. He holds a poker night and golf tournament each year for players and their wives or girlfriends."

Carle studied real estate for three years at the University of Denver. He intends to pursue that as a career when he retires from hockey, which is hopefully a long way off. While I am usually skeptical of the off rink business careers of pro athletes, Carle may be the exception. He is exceptionally articulate and sagacious.

I did not get to chat much with the very sweet Wayne Simmonds because he was shy and reserved. Much to my surprise, the entire team could teach Charlie Sheen a thing or two about proper behavior.

The Cheney Memoir: the Good. Bad, and Ugly

In My Time A Personal and Political Memoir
By Dick Cheney, with Liz Cheney Threshold Editions.
576 pp. $35

Former Vice President Dick Cheney, who recently received a heart pump, makes it clear in his memoir, In My Time, that he has not mellowed since leaving office. Cheney vigorously defends many of the controversial decisions of the Bush presidency such as the wars in Afghanistan and Iraq, waterboarding, wiretapping without warrants, and Guantanamo. He also assails some Bush administration colleagues and rails against the independent counsel who prosecuted his chief of staff, Scooter Libby.

Cheney, who wrote the book with his daughter Liz, offers an up close look at his 40 years of public service. He was White House chief of staff, Secretary of Defense, and congressman from Wyoming before becoming the most powerful vice-president in history. Cheney discusses foreign policy and national security almost exclusively, with domestic issues barely mentioned. There are only fleeting glimpses of former President George W. Bush, although the two had, by Cheney’s account, a good working relationship: “He made some decisions I didn’t agree with, but he had paid me the high honor of listening to my views, which, of course, he did not have to do.”

The book opens with a dramatic account of Cheney’s activities on 9/11. His version of events differs from Bush’s, which the former president detailed in his own memoir, Decision Points. Bush asserts that he was in charge aboard Air Force One, yet Cheney claims that was running the country in the hours after the Twin Towers went down. Cheney writes that he was the one who gave the order for the military to shoot down other planes in the air that day, if necessary:

In those first hours we were living in a fog of war... At about 10:15, a uniformed military aide came into the room to tell me that a plane, believed hijacked, was eighty miles out and headed for D.C. He asked me whether our combat air patrol had authority to engage the aircraft. Did our fighter pilots have authority, in other words, to shoot down an American commercial airliner believed to have been hijacked? “Yes,” I said without hesitation. A moment later he was back. “Mr. Vice President, it’s sixty miles out. Do they have authorization to engage?” Again, yes.

Cheney mostly sidesteps critical analysis of events he was involved with. He makes an eloquent case for the first Gulf War, when he was Secretary of Defense, but does not offer a cogent reason why the U.S. military did not attempt to capture or marginalize Saddam Hussein after his defeat. He fails to explain why the White House did not respond with more urgency to intelligence warnings in August 2001 of a possible terrorist attack on the United States. While angry that the failure to find weapons of mass destruction in Iraq hurt the popularity of the Bush White House, Cheney nevertheless maintains the U.S. was still justified in fighting a war that has now lasted eight years, cost billions of dollars and resulted in thousands of deaths. He reveals that he lobbied to bomb a nuclear reactor in Syria, but Bush turned him down. Cheney feels a measure of vindication because President Obama has continued some of his controversial policies, such as keeping Guantanamo open.

He disparages those in the Bush administration who disagreed with his views and readily admits dysfunction among Bush’s national security team. Tired of what he viewed as Colin Powell’s reluctant warrior stance and undermining of the White House by leaking to the press and others, Cheney pushed for Powell’s removal as Secretary of State. Powell, for his part, has excoriated Cheney for “taking cheap shots” in the book. Cheney also accuses Powell’s successor as Secretry of State, Condoleeza Rice, of misleading Bush about diplomatic efforts to counter North Korea’s nuclear program, which she vehemently denies. He acknowledges that his influence over the President waned during the second term by admitting that Bush fired Defense Secretary Donald H. Rumsfeld without asking him first.

Cheney does soften his Darth Vader image. His forthright description of his heart troubles will provide support and encouragement to those similarly afflicted. The implantation of a battery-operated pump last year to help his detiorating heart left him reflective: “Like a lot of people who face life threatening illness and walk in the sunshine again, I could not dismiss the possibility that more than the skill of doctors, the luck of the draw, or my own will to live had pulled me through.”

He prepared a signed letter of resignation in 2001 to spare the country a trauma if he became incapacitated.

And there are light moments. In one of the book’s lighter moments, Cheney recalls asking his assistant to arrange a meeting for his granddaughters with the Jonas Brothers during their visit to the White House and telling her, “I’m going to need some bios.”

The few words that Cheney devotes to economic policy show disarray among member of the Bush administration’s economic team. Secretary of the Treasury Paul O’Neil, who did not support tax cuts, was excluded from economic policy meetings at the White House. One might wonder whether the friendship between Cheney and others in the administration with former Federal Reserve Chairman Alan Greenspan may have precluded earlier questioning of Greenspan’s failed easy money policy.

The former vice-President is a polarizing figure. This polemic book is not going to sway anyone, but his supporters will be reminded why they believe in his world view.