The Harvard-Bush Connection

BUSHWHACKED: HUD Fraud, Spooks and the Slumlords of Harvard


BUSHWHACKED: HUD Fraud, Spooks and the Slumlords of Harvard
by Uri Dowbenko

The Harvard-Bush Connection

       Since historically the Chinese Opium Trade and the African Slave Trade
have provided the financial foundation for the Boston "Bluebloods," it should
come as no surprise that the Harvard Endowment Fund and the Harvard
Management Corporation are involved in what can be characterized as shady
enterprise at best -- or criminal activity at worst.

       In 1989, the Harvard Endowment Fund, became the 50% owner of HUD
subsidy (Section 8) and non-subsidy apartment buildings through its purchase
of NHP, an apartment management firm, headed by Roderick Heller III.

       Since their plan was to do an Initial Public Offering (IPO) or a merger
for NHP, they tried to run up the value by aggressive acquisition of more
apartments, preferably with HUD issued mortgage insurance which could be
defaulted on -- with little or no consequence.

       Unfortunately for Harvard, HUD had initiated its new open-disclosure
and performance-based auction under the direction of Hamilton Securities.
When the private market firms battled it out, Harvard was outbid by GE,
Goldman Sachs and Black Rock and its sour grapes apparently turned to

       In 1996, according to Fitts, Rod Heller told her that the government
had a "moral obligation" to him and his investors (Harvard Endowment) to
renew or roll over the subsidies with them to maintain their profits.

       In other words, an open auction-free marketplace was not acceptable to
the Harvard Boys, since they were operating their business of HUD-backed
corporate welfare-subsidies under what Heller claimed was "an understood

       The HUD portfolio of distressed properties had traditionally been
managed to derive profits for private business -- like Harvard Endowment Fund
-- and not the US taxpayers. Since Harvard was used to rigging profits
through politics, not fair business practices, it started losing income
because there were less management fees and the value of its stock started
going down.

       In 1991, Harvard and Heller asked Fitts to do an investment bank with
them. At the last minute, Harvard Management Company honcho Michael R.
Eisenson told her he wanted 20% of her new company's stock, and the deal was

       On the first large HUD loan sale, Eisenson complained to Fitts, "I
don't like this" --referring to Hamilton's use of optimization software to
auction HUD mortgages -- "because the only way we can win is by paying more
than our competitors. We prefer a bid process where we can win by 'gaming it'
because we are 'smarter.'"

       For those unfamiliar with Soviet (or is it Harvard-Mob?) terminology,
"smarter" is code language for saying "we can rig it." And "gaming it" means
finding a way of manipulating the players to get control of them, rather than
using the competitive process of free market capitalism.

       Eisenson was obviously quite at home with the proverbial "fix."

       And who is Mike Eisenson? He was the lead investor who eventually sold
Harvard's share of NHP to the Denver-based AIMCO. His other claim to fame is
that he was on the board of directors of the infamous Harken Energy which
rigged an insider stock deal on behalf of George W. Bush -- not
coincidentally a Harvard grad.

       In 1986, a small company called Spectrum 7 (George W. Bush, Chairman
and CEO) was acquired by Harken Energy Corp. After Bush joined Harken, the
largest stock position and seat on its board was acquired by Harvard
Management Co. The oil and gas, real estate and private equity portion of
Harvard Endowment also acquired. Warren Buffet's position in NHP, one of the
largest owners of HUD Section 8 subsidized properties in 1989.

       Then the Hamilton Securities initiated HUD loan sales were slowed down
and cancelled, and, of course, Harvard's capital gains were ensured through
an IPO of NHP and through a sale to AIMCO.

       The Harken Board gave the Junior Bush $600,000 worth of company stock,
plus a seat on the board, plus a consultancy worth $120,000 a year -- despite
suffering losses of more than $12 million dollars against revenues of $1
billion in 1989.

       In 1987 when creditors were threatening to foreclose, the Junior Bush
himself made a trip to Arkansas to meet criminal-banking kingpin Jackson
Stephens, whose Stephens Inc. arranged financing for the faltering Harken
Energy from a subsidiary of the Unon Bank of Switzerland (UBS). Stephens Inc,
of course, had ties to the notorious CIA money laundry bank, the Bank of
Credit and Commerce International (BCCI), where drug trafficking and
arms-smuggling profits mingled freely with looted S&L and fraud-scam proceeds.

       Then 1990 Bahrain awarded an exclusive drilling rights contract to
Harken and the Bass brothers added more equity to the deal. Six months later
George Bush Jr. sold off 212,140 shares grossing him $848,560.

       When Saddam Hussein invaded Kuwait the Harken stock dropped suddenly.
The SEC was not notified, and no action for insider trading was taken against
the Junior Bush. Why? SEC chairman Richard Breeden was a faithful Bush

       Today Eisenson, formerly one of the lead investors in NHP and Harken
and one of the primary portfolio managers of Harvard Management, runs a
private equity portfolio called Charlesbank Capital Partners LLC, Boston
which manages $1.4 billion in real estate investments for the Harvard

       One of the partners of a company doing business with NHP, Scott
Nordheimer actually admitted to Fitts in June 1996 -- "We tried to get you
fired through the White House and that didn't work. So now the Big Boys got
together, and you're going to jail." Shortly thereafter the qui tam lawsuit
with the bogus whistle-blower charges was filed against Hamilton.

       In this complicated story, there's another part of the puzzle which
needs exposure. The Hamilton Bushwhack involved Cargill personnel falsely
accusing the following companies of financial improprieties: Hamilton
Securities, as well as investment bankers Goldman Sachs and Black Rock
Financial, a subsidiary of PNC.

       Goldman Sachs has been touted as one of the largest contributors to the
Democratic National Committee and the Clinton-Gore Presidential Campaign.

       Was the Hamilton Bushwhack just another outward sign of a covert power
struggle? Because of its implications, it had the potential to lead to
Clinton's impeachment on serious fund raising violations -- a much more
significant charge than the Monica Lewinsky Sexcapades used in the Ken Starr

More Spooky Harvard Connections

       The key to the mystery of the Hamilton Bushwhack may ultimately be
found in the relationship between 1) government guaranteed/insured mortgages,
2) asset seizure/forfeitures, and 3) the private companies whose profits
derive from an inside track with both government programs.

       More lucrative than mere corporate subsidies, there are entire segments
of mega-business which depend on these government insider deals.

       For example, besides Harvard, the other primary investor in apartment
management company NHP was Capricorn Investments and Herbert S. "Pug"
Winokur, Jr.

       Winokur, former Executive Vice President and Director of Penn Central
Corp, CEO of Capricorn Holdings Inc. and managing partner of three Capricorn
Investors Limited Partnerships, is one of those insiders who may have
benefited from the outrageous assault on Hamilton's open bid auction for
defaulted HUD mortgages.

       Not incidentally, from 1988 to 1997, because of his large investments,
Winokur was also the Chairman and CEO of DynCorp, a US government contractor
whose customers include Department of Defense, NASA, Department of State,
EPA, Center for Disease Control, National Institute of Health, the US Postal
Service and other US Government agencies.

       Most importantly, according to SEC registration documents (S-1),
DynCorp is the prime servicer on the Department of Justice Asset Forfeiture
Fund, having procured a five year contract with the Department of Justice
worth $217 million from 1993 to 1998. This 1000 person contract required
staffing at over 300 locations in the US and involved support of DoJ's
drug-related asset seizure program. According to SEC documents, DynCorp's
personnel supports "US Attorney Offices that are responsible for
administering the federal asset forfeiture laws."

       In other words, DynCorp could have profited first from a successful
seizure of HUD loan sales. Then, DynCorp could have also profited from HUD
"Operation Safe Home" seizures, which target low-income tenants, mortgage
holders and apartment owners. And, since the company has the expertise and
personnel, DynCorp could also have targeted these communities with private
surveillance teams and non-lethal weapons to effect asset seizures using the
phoney War on Drugs as a rationale.

       By all accounts, there is at least a major conflict of interest in
Winokur's investments in HUD low income housing and his role in Department of
Justice seizures.

       Imagine -- if you're Winokur, you can make money on defaulted HUD
mortgages, guaranteed by US taxpayers, as well as by kicking out low-income
housing tenants because of drug-related "asset seizures." The
criminal-corporate-government scams don't get any better.

       In the case of Hamilton's open-bid auction process on defaulted HUD
mortgages, the potential $4.7 billion seizure of HUD loan sales would have
been a major plum for DynCorp as the prime servicer of the DoJ Asset
Forfeiture Fund.

       By the way, Winokur also had the "foresight" not to board the ill-fated
flight to war-torn Yugoslavia, which took Secretary of Commerce Ron Brown's

       There are other spooky connections. According to Newsweek (Feb. 15,
1999), Reston, Virginia based DynCorp is a $1.3 billion firm, which also
trains police in Haiti and works on coca eradication in Colombia, where three
of its American pilots have died since 1997.

       Reliable sources allege this shadowy outfit may be a CIA-military
proprietary, in other words, a privatized entity useful for "plausible
deniability." At any rate, it also provides "Yankee Mercenaries" for the
Colombian campaign against drug trafficking. Employing about 30 US Vietnam
War veterans, DynCorp has a $600 million contract to run and maintain the
planes and helicopters used in "anti-drug" efforts in Peru, Bolivia and
Colombia, according to the World Press Review (Nov. 1, 1998).

       Postscript: Who says (corporate) crime doesn't pay? According to the
Harvard University Gazette, in June 2000, Herbert S. Winokur Jr. was named to
join the seven-member Harvard Corporation, the University's executive
governing board.

Doing Business with the Feds

       Imagine having to wait more than 4 years to get paid on an invoice.

       For more than $2 million.

       From the US Government.

       That, in short, is what happened to Hamilton Securities.

       Doing business with the US Federal Government should come with a
warning label.

WARNING: Saving money for the taxpayers can be hazardous to your health.

       "HUD is withholding about $2 million of funds owed to Hamilton for
services performed for HUD," says Hamilton's President Catherine Austin
Fitts. "We also understand that this with-holding is at the request of the
Justice Department and the HUD Investigator General."

       "As the lead investment banker on $10 billion of loan sales, we have
been able to preserve the integrity of these transactions. We intend to take
whatever steps necessary to recover our shareholders" and employees value as
we have done for the US taxpayers. The unsealing of the qui tam lawsuit
should free HUD to meet its outstanding contractual obligations to Hamilton
as quickly as possible."

Toward a Positive Future

       And what is Catherine Austin Fitts doing now?

       Besides trying to recover her life, she's moving ahead with her new
company called Solari Inc., and her vision, the Solari Investment Model,
community-based programs for local equity building and investment.

       "Solari is an investment advisory service, which plans to re engineer
investment and financial structures at a local level, so that new technology
can be integrated into communities to increase jobs and ownership," says

       "Over the last ten years, we have prototyped a substantial number of
transactions, venture capital and portfolio strategy to determine the ideal
way to refinance communities in the stock market," she continues. "Our
intention is to create a fund which can finance local development -- and
maintain local control -- through an investment model geared for breakthrough
transformations with individual, organizational and community change."

       Her far-reaching vision is an inspiration. "By creating one or two
Solari Stock Corporations (one for real estate and one for venture capital)
through a community offering, and swapping non-voting stock for outstanding
debt," says Fitts, "the community can lower short term debt service and
realign interests between numerous constituents who can be positioned in a
win-win financial model."

       The problem, in one sense, is simple. The old model -- the
Soviet-inspired centralized command & control system which rules Washington,
its agencies and the beltway bandits feeding at the trough of corporate
subsidies -- must give way to the new paradigm of the neighborhood investment
model. It's a foregone conclusion: the corrupt system which guarantees
profits to insiders will be swept into the ashcan of history, just as the
Soviet Union and its proxies' brand of communism has been discredited
forever. It's just a matter of time.

       In the end -- by building an alignment between spirituality and the
material world -- Catherine Austin Fitts believes that "everyone can prosper
through actions which integrate our spiritual principles in the material
world in which we live and work."

       For more information of the Solari Model of Investment and
community-based profitability, click on

Copyright 2000 Uri Dowbenko.
All Rights Reserved.

Uri Dowbenko can be reached by e-mail at


The Harvard-Bush Connection



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