THE UGLY TRUTH ABOUT THE A.D.L.
By E.I.R.Editors
Chapter 3
By E.I.R.Editors
Chapter 3
The ADL and
the Opium War
Against
America
For the past two decades, Wall Street lawyer
Kenneth Bialkin has been "Mr. A.D.L." A longstanding
member of the League's National Executive Committee,
Bialkin served from 1982 through 1986 as the League's
National chairman. It was on his watch that gangster Moe
Dalitz got the A.D.L's prestigious "Torch of Liberty" prize;
that junk bond swindler Michael Milken poured millions
of dollars into the launching of the League's "A World of
Difference" propaganda campaign to wreck American
public education; and that accused drug money launderer
Edmund Safra got Bialkin and the A.D.L to mediate
a corporate divorce between his banking empire and the
American Express Company. In return for Bialkin's effort
to salvage Safra's badly tarnished reputation, the A.D.L
received all million tax-exempt payoff from him. But Bialkin's real claim to fame is that he was a
central figure in the doping of America.
Without Kenneth
Bialkin's behind the scenes legal maneuvering, the Medellin
Cartel would have had a far more difficult time
establishing a beachhead in the United States. In much
the same way Bialkin quieted the potentially stormy
divorce between Edmund Safra and American Express,
he brokered the marriage between renegade financier
Robert Vesco and the Medellin Cartel's chief of logistics,
Carlos Lehder Rivas. As a result, the dope smuggling
routes through the Caribbean into the United States were
consolidated, and the streets' of America were flooded
during the 1980's with marijuana and cocaine.
Bialkin, Vesco, and IOS
This sordid story began in 1970, when Kenneth Bialkin,
the senior partner at the Wall Street law firm of Willkie,
Farr and Gallagher, helped engineer Robert Vesco's takeover
of the Investors Overseas Service (I.O.S), a Swiss based
mutual fund that was founded by Bernie Cornfeld
with startup funding from the Swiss-French branch of
the Rothschild family.
I.O.S was a front for Meyer Lansky's international
crime syndicate. I.O.S "salesman" traveled the globe carrying
suitcases full of cash across international borders.
Some of the money came from local investors, but the
bulk of it was hot money gained from the Lansky syndicate's
dope, gambling, prostitution, and extortion
rackets.
If this method of money laundering was labor intensive
and primitive compared to today's high-speed electronic
wire transfers, it was nevertheless efficient. The
cash eventually wound up in numbered accounts at some of Switzerland's most corrupt and secretive banks. Some
of the banks linked to the I.O.S apparatus, like the Geneva based
International Credit Bank (B.C.I) and the Nassau,
Bahamas-based Bank of World Commerce, were flagrant
fronts for the Lansky syndicate. While B.C.I was owned
by a senior officer of the Israeli Mossad named Tibor
Rosenbaum, B.C.I's office manager, Sylvain Ferdman, was
identified by Life magazine in 1967 as one of Lansky's
top bag men; and World Commerce director Alvin Mainik
was Lansky's "accountant."
When Lansky and his controllers decided to shift
the center of their underground banking operations from
Switzerland to the Caribbean as part of the planned
expansion of cocaine and marijuana smuggling into the
United States, it was the A.D.L and Bialkin that engineered
the move.
First, the A.D.L's Minneapolis, Minn. apparatus
(known inside the League as the "Minneapolis Mafia"),
which ran the notorious Kid Cann (Isadore Blumenfeld)
organized crime ring, provided the money for a local
Hebrew schoolteacher turned business entrepreneur
named Meshulam Riklis to buy up a large block of shares
of I.O.S stock. Once Riklis had amassed enough stock to
control the company, he turned around and sold all his
shares to Vesco. Vesco was represented in the transaction
by Kenneth Bialkin.
Vesco's next step was to oust Bernie Cornfeld as the
president of I.O.S and take over the job himself. Over the
next several years, a total of $270 million was siphoned
out of I.O.S accounts in Switzerland. Officially, the money
was never found, and Robert Vesco conveniently fled the
United States one step ahead of the F.B.I and the I.R.S.
The Cornfeld to Riklis to Vesco transaction itself may have been largely a wash of Lansky syndicate dollars.
From Prohibition onward, the Minneapolis Kid Cann
gang had been handlers of Lansky money. Kid Cann eventually
moved to the Miami area and was a key player in
Lansky's big time move into southern Florida "gold coast"
real estate.
However, not all of the money siphoned out of I.O.S
by Vesco was "family cash." A lawsuit was brought in U.S.
District Court in New York City in 1980 by some of the
independent, investors who had lost their shirts in the
looting of I.O.S. While not revealing the whereabouts of
the missing millions, the civil suit identified Bialkin and
the Bank of New York as partners of the fugitive financier
in the scheme. On July 31, 1980, Federal Judge D.J.
Stewart ordered Willkie, Farr and Gallagher to pay $24.5
million to a group of I.O.S investors and ordered the Bank
of New York to pay $35.6 million. The case file, which
fills twenty cartons stored at the Federal District Court
warehouse in Bayonne, N.J., shows that Bialkin was the
evil genius behind the looting scheme.
By 1980, the Vesco-Lehder-owned Normans Cay was serving as the command center and transshipment depot for a massive marijuana and cocaine trafficking operation from Medellin into the United States.
For several years, while running the Normans Cay operation, Vesco skipped from the Bahamas to Costa Rica to Nicaragua, buying up local politicians and newspaper editors and always miraculously staying one step ahead of an FBI that never really seemed too intent on capturing the fugitive money man. On one occasion on Antigua, Vesco was hosting a lavish party on a boat that he had bought from Saudi financier Adrian Khashoggi, while FBI agents were combing the island looking for the elusive fugitive.
In 1982, Vesco took more secure permanent refuge in Havana, Cuba as the personal guest and financial adviser to Communist dictator Fidel Castro. Vesco and Lehder cut Castro into the lucrative cocaine and marijuana business, using Cuban airstrips to refuel their drug flights to America and, in return, helping Fidel to funnel guns to terrorist groups across Latin America. According to investigative reporter Ernest Volkman, by 1984, Vesco and Lehder had earned Fidel a $20 billion cut of the growing Western Hemisphere dope trade. Thanks to A.D.L front man Vesco, Americans were getting hooked on cocaine, while Fidel Castro was reaping billions to foment narco-terrorist insurgencies all over the Hemisphere;
In the meantime, back on U.S. soil, "Mr. A.D.L," Kenneth Bialkin, continued to ply his trade. In 1988, he left his post as managing partner of Willkie, Farr to take a partnership at another Wall Street mega-firm, Skadden Arps Slate Meagher and Flom. In the speculative frenzy that had followed the Carter administration's deregulation of the nation's banking system and financial markets, Skadden Arps had emerged as the "sleaze king" of Wall Street lawyering. The firm's number one client was Drexel Burnham's junk bond super-salesman, Michael Milken. When Milken left the wood-paneled conference rooms of lower Manhattan to set up shop in Beverly Hills, Calif., Skadden Arps obliged by opening up their own eighty-man Beverly Hills office to service Milken's every need.
Among Milken's oldest and most well-fed clients was Meshulam Riklis, the former Minneapolis Hebrew schoolteacher who had been an important prop in the Bialkin-executed takeover and looting of I.O.S.
(To do him justice, it should be noted that before he landed in Minnesota, the Turkish-born Riklis had been a British police spy in Palestine before Israel won its independence. When his treachery was exposed, the Stern Gang, led by Menaehem Begin and Yitzhak Shamir, tod imposed a death sentence on Riklis, That death sentence was finally lifted in the early 1980s after the Begin and Shamir-led Likud Party came into power in Israel, and Riklis made a very large cash contribution to their campaign coffers. That rapprochement was apparently arranged by Israel's Defense Minister Ariel Sharon, after Riklis bought him a ranch in the Negev Desert)
Bialkin and Safra
Before he moved over to Skadden Arps, Kenneth Bialkin had occupied a great deal of his time during the 1980's
with engineering a consolidation and reorganization of
some of the oldest of the "Our Crowd" brokerage houses.
The banking deregulation frenzy of the Carter and early
Reagan years, combined with skyrocketing U.S. interest rates, had turned the U.S. economy into a haven for
hot money. "Narco-dollars" were flooding the U.S., and
Bialkin apparently recognized that if he could create a
large enough and diversified enough financial structure
to accommodate the hot cash, the rewards would be
nearly endless. In rapid succession, he executed the absorption of Lehman Brothers into Kuhn, Loeb and Company. Shearson Hayden Stone bought out Loeb Rhodes. And, by 1984, all of those houses had been in turn bought out by American Express Company, which changed its name to Shearson Lehman American Express.
Bialkin was an attorney of record on each of these transactions and he landed a seat on the board of directors of the newly consolidated Shearson Amex entity. Bialkin's buddy Henry Kissinger, by now a high-flying consultant to a fleet of major multinational corporations, also joined the board of the Amex mega-combine.
In 1983, Bialkin had also orchestrated the marriage of the Amex conglomerate with Edmund Safra's Trade Development Bank of Geneva. When the ink dried, Safra was holding 4 percent of Amex's stock and was president of its private banking division. The other large-block shareholder in the new conglomerate was Carl Lindner, another rags-to-riches wheeler-dealer long suspected of being a front man for the Lansky crowd. Courtesy of Michael Milken and former Dalitz "Purple Gang" member Max Fisher (another prominent ADL figure), Lindner became the owner of United Brands, formerly the United Fruit Company. U.S. Drug Enforcement Administration officials acknowledged in 1978 that an estimated 20 percent of the illegal drugs coming into the United States from South and Central America were being smuggled courtesy of United Brands, a company with longstanding ties to organized crime and U.S. intelligence.
The capacity for money laundering and smuggling
represented by this United Brands-Amex combine made
Vesco's earlier IOS venture seem like a mom and pop
operation in comparison.
However, things began to unravel very dramatically
for Bialkin and his conglomerate clients on April 2,1989.
That day's Sunday edition of New York Newsday ran a
full-page banner headline: "Dirty Money—No.
606347712 Is the NY Bank Account Where 2 Major Drug
Money-Laundering Probes Meet."
The story, by ace investigative reporter Knut Royce,
revealed that Edmund Safra's Republic National Bank of
New York was serving as a money laundering hub for
both the Medellin Cartel and the Syrian-Lebanese Mafia.
DEA and U.S. Customs investigators involved in two separate
high-priority probes had traced dope dollars from
South America and the Middle East into the same numbered
account at the main branch of Republic.
Royce's story was based in part on a Jan. 3, 1989 DEA
report from the Berne, Switzerland office. The subject of
the report was a Geneva-based firm, Shakarchi Trading
Company. Working in league with the Bulgarian secret
police, the Turkish mafia, and Syrian and Lebanese drug
traffickers in the Bekaa Valley, Shakarchi had laundered
the profits of the Middle East heroin and hashish trade
through Switzerland into Republic National Bank. Account
No. 606347712 was Shakarchi's account.
What's more, the DEA document revealed that Edmund
Safra had been a lifelong friend of Mahmoud Shakarchi,
the founder of the Swiss company, and continued
to enjoy a close business relationship with Mahmoud's sons, who were running the firm at the time of the Newsday
expose. The DEA report said that all of Safra's banks
had "surfaced in the investigation of Shakarchi's alleged
drug money laundering activities."
The Newsday story had been apparently put together
with the assistance of angry federal drug investigators
who felt that major drug money laundering cases
had been blocked for political reasons.
Indeed, both Bialkin and Safra were hot political
commodities at that moment. Iran-Contra special prosecutor
Lawrence Walsh was deep into his probe of illegal
covert operations by the Reagan-Bush White House, and
both Bialkin and Safra—as well as the A.D.L—had surfaced
as prominent players in the secret diplomacy with Khomeini's
Iran and the illegal covert war against Nicaragua:
• Bialkin had been the attorney for Adnan Khashoggi
in arranging for the Saudi financier's purchasing of
the original shipment of arms to Iran in exchange for
the release of an American hostage.
•Bialkin's Willkie, Farr law partner in Geneva, Willard
Zucker, had been the money handler for Oliver
North and Richard Secord at Lake Resources, Inc.
Earlier, Zucker had been Bialkin's Swiss point-man
in the Vesco looting of I.O.S.
•Another longtime Wall Street associate of Bialkin,
Arthur Liman, had served as the chief counsel to the
Senate Iran-Contra panel, which whitewashed the
scandal and threw up major roadblocks to Walsh's
independent counsel probe.
•The A.D.L's Latin American Affairs director, Rabbi
Morton Rosenthal, had authored a report labeling
the Sandinista regime in Nicaragua as "anti-Semitic"and urging all American Jews to back the Reagan
administration's secret war in Central America.
•Carl Gershman, who cut his political teeth working
as a full-time staffer at the A.D.L's Fact Finding (dirty
tricks) Division in the late 1960's, was made the head
of the Reagan administration's National Endowment
for Democracy (NED), which was the primary funding
conduit for the entire Contra effort.
•Edmund Safra had been directly involved in the logistics
of the Iran-Contra operations through his Republic
Corporate Air front company, which he jointly
owned with Willard Zucker. According to news accounts,
it was one of Safra's airplanes that brought
Ollie North and Robert McFarlane to Teheran in the
spring of 1986 in their last ill-feted effort at an arms for-hostage
deal.
The Newsday story also intersected an escalating
war of words between Safra and Amex Chairman James
Robinson III. Safra had quit as Amex's international banking
head a few years after he had merged his Trade
Development Bank into the Bialkin-made mega-firm.
With a four-year, non-competition clause now expired,
Safra had launched a raid on some of Amex's top employees
and private banking clients in preparation for the
launching of a new private bank in Switzerland. Amex
fought back and the whole sordid affair landed before a
federal judge in civil court in New York. Kenneth Bialkin,
still representing Amex, hammered out an out of court
settlement which included a published apology to Safra
and a payment by Amex of $1 million to each of four of
Safra's favorite "charities." The A.D.L was on the top of the
list of beneficiaries.
It was a classic case of ADL sleight of hand, Amex
delivered an "apology" to Safra, "exonerating" Safra of
any alleged drug money laundering, even though nobody
ever challenged the authenticity of either the DEA's
Berne memo or the Newsday story! The New York Times
and all the major Wall Street-linked news media dutifully
ran the Amex mea culpa, and the ADL waltzed off with
a cool million bucks in tax-exempt funds.
In the meantime, the ADL was busy on a dozen other
fronts, helping to fuel the speculative frenzy that would
drive the U.S. economy into the ground by the end of
the 1980's.
Chapter 4
The ADL and
the Junk Bond
Bandits
Rip Off
America
In the autumn of 1991, attorney Alan Dershowitz,
who had been hired by junk bond king Michael
Milken to get him out of jail, purchased an ad in the New
York Times to denounce a new book on Milken as "antisemitic."
The book, Den of Thieves by James B. Stewart,
the front-page editor of the Wall Street Journal, detailed
the massive and consistent criminality of Milken's operation
at Drexel Burnham.
In his book, Stewart cut through the myth of Milken
as a financial genius, showing instead that much of his
"success" was due to illegal acts which preyed upon both
those who invested their money with Drexel's brokers,
and on the U.S. economy as a whole.
The attempt by Dershowitz to dismiss Milken's
criminality by alleging that he was the victim of an "anti-Semitic cabal" was vintage A.D.L; In much the same way
that the League cut its teeth defending Lower East Side
gangsters against the crackdown by New York City Police
Commissioner Theodore Bingham by libeling the
commissioner as an unrepentant "anti-Semite," Dershowitz
and other ADL mouthpieces branded Milken's accusers
with the same devastating label.
The Dershowitz defense of Milken let slip a very
important secret: Milken and his Wall Street allies had
replaced the pinstripe-suited and machinegun-toting
gangsters of Prohibition as the lions of organized crime.
It was Meyer Lansky's dream come true: to insulate his
organized crime successors as "untouchables" byputting
them in the driver's seat of the U.S. economy. And the
ADL was on hand every step along the way.
Recycling Narco-Dollars
When Milken, fresh out of the Wharton School of Economics
at the University of Pennsylvania, first presented
his theories on the profitability of high-yield bonds (also
known as junk bonds) to skeptical traders at Drexel
Burnham in the early 1970s, he found few takers. After
the dual shocks of Nixon's August 1971 order severing
the remaining link between the dollar and gold, and
Kissinger's 1973 oil hoax, Wall Street was looking for
stability, and the major investment firms were quite conservative
in their investments.
The 1976 election of Jimmy Carter, however, initiated
a process of economic degeneration that led to
many changes in how Wall Street conducted its business,
changes which cleared the way for Milken and his allies
to unleash their financial experiments on the nation.
Already, the stage had been set by the mid-1970's Kissinger-engineered oil hoax, which led to skyrocketing
petroleum prices and a flood of what came to be known
as "petro-dollars" into the American banking system. The
"petro-dollars" of the seventies paved the way for the
narco-dollar invasion of the 1980's.
The appointment of Paul Volcker as chairman of the
Federal Reserve Board in 1979 was a watershed in the
process of opening the U.S. economy for wholesale looting.
Volcker raised interest rates to the highest sustained
levels in U.S. history. These high interest rates squeezed
bank profits even further, as the cost of borrowing money
from the Fed went through the roof.
The only solution to this crisis, most bankers concluded,
was to deregulate the banking system and
thereby transform it into the newest safe haven for illegal
cash. By the time Congress passed the Garn-St Germain
Act in 1982, the U.S. banking system had been completely
opened to foreign flight capital, and banks and
savings and loan institutions ( S&Ls ) were given the green
light for the first time ever to invest directly in real estate,
junk bonds, and many other speculative ventures which
had been previously prohibited.
One big advocate of total deregulation was then Vice
President George Bush, who was the chairman Of
President Reagan's blue ribbon task force on deregulation.
Under his and Volcker's direction, most antitrust
legislation was struck down, thus allowing the huge
mergers and takeovers of the 1980s to occur, with funds
raised by Milken's networks.
Milken and Junk Bonds
With Volcker at the Fed running interference for the
drug bankers, and with deregulators in the Executive Branch striking down protective regulations in conjunction
with their congressional allies, the doors were
opened for bringing the offshore drug profits back into
the United States.
And it was Michael Milken and his domination over
the junk bond market which provided the mechanism
by which the funds would be laundered.
Junk bonds offered an ideal way to repatriate drug
money and other illicit funds. From his promotion of
junk bonds in the mid-1970's, Milken built up a network
of "corporate raiders" around him, many of whom had
organized crime connections. They had excess dollars,
money which they used initially to buy real estate, restaurants,
casinos, and other cash-based businesses ideally
suited for washing money. However, as the drug trade
flourished, these traditional means of laundering money
became inadequate. They needed bigger, more expensive
targets.
Again, it was Milken who provided these targets.
During a brainstorming session with the brass at Drexel
Burnham, Milken won over CEO Fred Joseph to the idea
of using junk bonds to fund corporate takeovers. The
same raiders who had been purchasing junk bonds could
use their money to take over large corporations, especially
corporations with a large cash flow, such as food,
beverage, and tobacco companies. Milken would sell
junk bonds to part of his network of raiders, who would
use their illicit funds to purchase the junk bonds. The
money raised from the sale of the junk bonds would
provide the funds for another raider to buy the company.
Then, the new owner could mix in (i.e., launder) further
drug revenues with the cash flow of his newly purchased
company.
One assistant U.S. attorney who has been building
cases against money laundering for years, said that this
process makes it very difficult to trace the initial funds.
"To start with," he said, "these transactions [the takeovers]
are very difficult to follow. But when you start
using companies with heavy cash flows, which are ideal
for money laundering, it becomes almost impossible."
U.S. tax laws also favored use of junk bond sales for
takeovers. Under provisions of the corporate tax code,
interest paid on debt is deductible, while dividends received
from stock holdings are not The tax laws favor
those raiders who take over firms through generating
huge debt responsibilities, while penalizing those who
act to increase profits through investments which increase
productivity.
Huge tax liabilities were thus evaded through the
debt-backed takeovers financed through junk bonds. In
addition to his network of raiders, who to a man enjoyed
long-term relationships with the ADL, Milken's operation
could not have succeeded without the aid of the finest
lawyers dirty money could buy. While there were many
firms which offered they help, three stand out and all
three are deep into the ADL circuit:
• Paul, Weiss, Rifkind, Wharton and Garrison.
Founder Seymour Rifkind served as an adviser to one of
Milken's leading raiders, Ronald Perelman. Rifkind was
counsel to the Golding family, which Perelman married
into. The grandfather of Perelman's first wife Faith Golding,
was a founder of the A.D.L's Sterling National Bank.
Rifkind joined the board of Perelman's company MacAndrew
& Forbes, which he used as a vehicle to take over
Pantry Pride and Revlon, two of the country's largest
consumer-goods outfits.
Rifkind was also on the board of Revlon, even while
it was being targeted by Perelman. Rifkind protege Arthur
Liman would serve on Milken's defense team following
his 1989 indictment for insider trading. Liman joined
the Milken team fresh from a stint as chief counsel to the
House of Representatives' Iran-Contra panel, in which
capacity he helped cover up the A.D.L's pivotal role in
that covert criminal program.
■ Skadden Arps, Slate, Meagher and Flom. Senior
partner Joseph Flom has been at the center of every
major takeover during the 1970's and 1980's. According
to Connie Brack, author of Predator's Ball, and a leading
expert on takeovers, Flom and Martin Iipton of Wachtell,
Lipton "virtually had created the takeover business in
the seventies." Anyone looking for a takeover target hired
either Flom or Upton; those firms which became targets
would hire the other one for "protection."
According to one prosecutor who worked on the
Wall Street fraud cases in the late 1980's, "these two law
firms were just like the 'insurance business' run by the
mob—if you don't get insurance by hiring one of them,
you might get targeted." Mob lawyer and former ADL
National Chairman Kenneth Bialkin joined Skadden Arps
in 1988.
• Wachtell, Lipton.
Milken's Monsters
Once George Bush's task force eliminated the regulatory
measures which had protected American enterprises and
corporations from sharks and looters, and with teams of
lawyers in place to defend them, it was time for Milken
to unleash his raiders.
During the decade of the 1980's, more than $1.5
trillion was diverted into corporate takeovers and leveraged
buyouts (L.B.O's). Of this amount, more than $60
billion went direcdy into the pockets of the investment
bankers, the "dealmakers" (i.e., the "raiders"), and their
attorneys.
Henry Kravis, one of the leading deal makers of the
1980's, exploited his close A.D.L ties to raise money for
the takeover antics of his firm, Kohlberg Kravis & Roberts
(KKR). Once Drexel Burnham decided to use junk bonds
to finance takeovers, the Kravis-Milken connection was
a natural.
Milken and his raider networks provided billions of
dollars to help finance K.K.R's takeovers. Henry Kravis'
K.K.R was created in 1976 with $120,000. By 1990, it
had borrowed $58 billion from banks, S&Ls, insurance
companies and pension funds, to take over more than
35 companies, While cousins Henry Kravis and George
Roberts are now worth more than $500 million each,
the firms they took over have been loaded up with debt,
threatening the investments made by S&Ls, insurance
companies, and pension funds.
To pay this debt, the firms were asset-stripped, and
forced to close down factories, throwing hundreds of
thousands of people onto unemployment lines. Many of
these deals resulted in bankruptcies, forcing the federal
government to cover the losses when the bankrupted
firm was taken over, by borrowing from a federally insured
bank, S&L or pension fund.
While the new management created by the takeover
was dismantling the company to pay the debt generated
to buy it, the raiders came away with huge profits. Milken alone received a $550 million bonus from Drexel in
1986, and he doled out another $150 million in bonuses
to his team.
Working hand in hand with Milken in the looting of
America were a collection of figures with close links to
both organized crime and the A.D.L Collectively, they
were given the name "Milken's Monsters" by one of their
most notorious members, Meshulam Riklis. Riklis, the
front man for the ADL's "Minneapolis Mafia," had been
the middle-man in the Vesco-Bialkin takeover of Investors
Overseas Service.
The Monsters were Milken's first followers, those
who saw in his promotion of junk bonds the means by
which they could launder funds, while simultaneously
generating the leverage to take over major corporations,
which would further facilitate their laundering. Many of
them began by purchasing insurance companies, which
in turn became major purchasers of junk bonds. In the
early stages of Milken's ascendancy, the Monsters routinely
passed funds back and forth among themselves,
buying issues of junk bonds offered by each other's insurance
companies. This first group of Monsters included:
• Carl Lindner, who took over Cincinnati's Provident
Bank in 1966. He then acquired Great American, a
property and casualty insurance company, which operated
as a subsidiary of the financial holding company
American Financial Corp. In 1974, when Lindner was
just beginning his relationship with Milken, he was under
investigation by the Securities and Exchange Commission
(SEC) for violating anti-fraud and anti-manipulation
regulations.
We have already encountered Lindner as the United
Brands owner who joined with Edmund Safra in staking out the biggest claims in Amex. Lindner and his "Purple
Gang" partner Max Fisher literally took over United
Brands over the dead body of CEO Eli Black, who mysteriously
fell or jumped out of a window of the Pan Am
building in New York City, while in the midst of fighting
the Lindner grab.
Black's son, Leon Black, was placated by a lucrative
job as one of Milken's top allies, as a "strategic planner"
at Drexel. It was Leon Black who in 1979 helped Milken
convince Drexel CEO Fred Joseph that Drexel should
use its clout from junk bonds to back the raiders in
takeovers. Black said the raiders are the "robber barons
of the future... These are the guys who are building
empires."
Lindner soon became Drexel's biggest client, in
both trading and corporate finance. He was represented
by Peter Fishbein of Kaye, Scholer, a law firm which
serves as official outside counsel to the A.D.L's Sterling
Bank. Fishbein has been an A.D.L officer since 1970. In
1992, federal regulators banned Fishbein from ever having
any dealings with banks or any other financial institutions,
as the result of a probe that linked him and the law
firm to a coverup of S&L looting by Lincoln Savings and
Loan's Charles Keating.
• Saul Steinberg, who started a computer leasing
business, Leasco, in 1961, shortly after graduation from
college. He was backed up in his early takeovers by
Sanford Weill, a leader of Wall Street's "New Crowd"
who was named A.D.L's Man of the Year in 1981. Weill's
lawyer at the time was the A.D.L's next national chairman,
Kenneth Bialkin. With Weill's backing, Steinberg took
over Reliance Insurance Co., which he used to make a
play for New York's Chemical Bank in 1969.
After taking over Reliance, Steinberg brought in Bialkin's
law firm, Willkie, Farr and Gallagher to represent it
The Saul Steinberg Foundation is also represented by
Bialkin's firm. It donates heavily to the A.D.L.
• Mesbulam Riklis, who spent much of the 1970's
under investigation by the SEC and U.S. Customs Service
narcotics officials. Riklis used Rapid American, a conglomerate
which included International Playtex, Schenley
Industries, Lerner Shops, and RKO-Stanley Warner Theaters, to finance his raids.
Shortly after Riklis took, Rapid American private,
Lindner and Steinberg followed suit, with American Financial
and Reliance respectively. The Riklis Family
Foundation has contributed heavily to the A.D.L, according
to Internal Revenue Service (I.R.S) documents.
• Laurence Tisch, whose insurance company CNA
was a frequent investor in junk bonds issued by Milken.
His Tisch Foundation has provided funds for the ADL.
Lindner, Steinberg, Riklis, and Tisch all invested
heavily in each other's offerings. For example, Carl Lindner,
through American Financial, was the second largest
shareholder in Steinberg's Reliance and in Tisch's Loews
Corp., as well as a major shareholder in Riklis' Rapid
American. When Milken needed to raise funds, any one
of these four could be counted on for quick bucks.
The Monsters Unleashed
There were others from the same organized crime networks
who joined the Monsters. Victor Posner, who
operates out of rundown offices in Miami Beach, made a
fortune in real estate in the 1930's and 1940's. Like many
of the old timers in the Milken-A.D.L stable, he, too, was
reputed to have been a financial partner of Meyer Lansky.
Posner, who like Meshulam Riklis engaged in "creative
financing" before hooking up with Milken, was forced to
sign a consent decree with the S.E.C over allegations that
he misused pension funds from Sharon Steel, a firm he
looted in the 1970's.
Ronald Perelman, another of Milken's raiders, has
deep ties to the A.D.L Perelman married Faith Golding,
whose grandfather founded Sterling National Bank. MacAndrews
& Forbes was the vehicle used by Perelman to
take over Pantry Pride, with financing from Milken. He
then used Pantry Pride to take over Revlon, financed
again by Milken, and advised by Skadden Arps' Joe Flom.
With the same network of advisers and some inside
political help, Perelman was able to take advantage of
the S&L asset giveaway known as the Southwest Plan, in
which he received the assets of six shut down Texas
S&Ls for a nominal fee, while receiving a $900 million
tax credit to cut his liabilities from the Revlon takeover.
When Perelman divorced Golding, his lawyer was mob
attorney Roy Cohn.
Up until he died of AIDS in the late 1980's, Cohn
maintained intimate, behind the scenes ties to the A.D.L
According to internal A.D.L documents, Cohn was never
placed on the League's directorate out of fear that the
A.D.L would lose the financial backing of many prominent
ex-Communists, who still detested Cohn for his antics
during the 1950's Joe McCarthy Red Purges.
Another of Milken's raiders was Nelson Peltz, who
bankrupted his family's frozen food business and was
personally close to bankruptcy when he obtained Milken's
backing to take a 9.5% share of Sterling Bancorp
in 1980. Next, Milken helped Peltz and partner Peter
May with a takeover of Triangle Industries, which they then used to leverage a $456 million bid for National
Can, financed completely by junk bond sales by Milken.
In these cases, and hundreds more, Milken provided
the financing by which the raiders took over corporate
America. With almost unlimited funds, Milken bragged
to an associate, "We're going to tee-up GM, Ford, and
IBM. And make them cringe."
Milken's confidence came from the knowledge that
behind all his investment wizardry stood a pool of nearly
$6.25 trillion—the gross profits of the international dope
trade from 1978-1990. Milken never owned up to his
sources of capital. At the peak of his power, he would
simply dash off "highly confident letters" informing takeover
targets that he would be able to generate whatever
amount of liquidity would be needed to buy out their
companies.
Milken's other source of confidence was his deep
connection to the A.D.L. Milken believed that by pouring
money into the League's coffers, he would be forever
"untouchable."
In 1987, for example, the Milken Family Fund gave
$28,000 to the A.D.L Foundation-Christian Rescuers Project,
and $10,250 to the A.D.L Foundation, in addition to
a grant to the A.D.L of $344,000. The same foundation
gave the A.D.L $29,000 in 1990.
The Capital Foundation, also under Milken's control,
approved $1,245 million to the A.D.L for "future payment"
in the year ending Nov. 30, 1989.
to be continued...next
Colluding With
Terrorists
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