China and Soros Take the Fun out of the Triple Crown?

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Seems nothing is sacred from globalism including horse-racing, especially when one investor is a rogue nation and the other is a rogue person. Sigh…

DERBY HOPEFUL JUSTIFY TAKES SANTA ANITA ALLOWANCE BY 6 ½ ... photo

So, meet the China Horse Club founded by Teo Ah Khing. Born in Malaysia, he is apparently an acclaimed architect, entrepreneur and horse breeder. He has been a senior advisor to heads of state including the Prime Minister of Malaysia, Mohamed, Musharrafh, President of Pakistan and Sheikh Mohammed bin Rashid al Maktoun of United Arab Emirates.

Justify: Meet the Horse, Jockey, Owners & Trainer | Heavy ... photo

Then we have George Soros. Soros controls operations in SF Bloodstock and SF Racing Group. Okay, read on….and decided whether or not to bet of Justify to win the Triple Crown.

Kentucky: If the strapping chestnut colt Justify wins the Belmont Stakes on Saturday to become just the 13th horse in history to claim horse racing’s Triple Crown, two of the three groups that have an ownership stake in the horse’s breeding rights will be front and center during the celebration.

WinStar Farm, one of North America’s leading Thoroughbred racing and breeding operations, owns 60 percent of Justify’s breeding rights. China Horse Club owns 25 percent. A third group, a secretive entity that holds the remaining 15 percent, will remain out of the spotlight because it vigorously avoids any public attention. It is a company controlled by top employees of billionaire investor George Soros.

Soros’ connection to Justify, which was not previously reported, has garnered little notice in the sport despite the horse’s rousing success in the Kentucky Derby and the Preakness Stakes because his group tries to operate almost invisibly. Several officials, who sit atop one of the biggest owners in stallion equity in the world, declined to comment about Soros’ involvement in horse racing through his fund.

Soros’ investment firm, Soros Fund Management, is behind SF Bloodstock and SF Racing Group, an international breeding and racing operation started in 2008. Executives from the investment firm oversee the breeding and horse ownership businesses. Gavin Murphy, an Australian based in New York who has served as the Soros Fund’s longtime tax counsel, is the manager of SF Bloodstock and SF Racing Group. Christopher Naunton, chief financial officer for the Soros Fund’s family office, is the president of SF Bloodstock and SF Racing Group, corporate filings show. Tom Ryan, an Irishman based in Lexington is the team’s bloodstock agent.

Soros.jpg
George Soros at his Open Society Foundations office in New York, May 27, 2014. If the strapping chestnut colt Justify wins the Belmont Stakes on June 9, 2018, to become just the 13th horse in history to claim horse racing’s Triple Crown, three groups have an ownership stake in the horse’s breeding rights, and one of them is a company controlled by top employees of Soros.
Joshua Bright The New York Times

SF, which is also a part-owner of Newgate Farm in Australia, has breeding stock in the United States, Australia, England, Ireland and France. It could not be determined how much money Soros’ firm has committed to the horse racing business.

SF Bloodstock, which according to court filings is owned by SF Agricultural Holdings LLC, employs a for-profit model and focuses on the breeding side of the industry, purchasing stallions, or shares in them, and broodmares while selling yearlings at auction. In 2015, it entered into a three-year partnership with WinStar Farm and China Horse Club that allowed them to spend big while spreading risk at yearling and 2-year-old sales. That is how the group partly acquired Justify and the third-place Kentucky Derby finisher Audible, but it quickly sold its racing rights in those horses to Head of Plains Partners and Starlight Racing.

“To me, and the couple guys that I do this with, it’s more fun to be in the winner’s circle when Justify wins the Derby holding the trophy,” said Sol Kumin, a hedge fund executive who runs Head of Plains. “So you kind of have to pick. If this became my full-time job, which it won’t, I would have a different program, focusing more on the stallion business and breeding. Now we still want to make money, and so far we’ve done well, but it’s hard.”

Just days after Justify’s Preakness victory, chatter began to surface about a $60 million deal with the rival farm Coolmore for his breeding rights. The deal is believed to include a bonus of about $25 million if he were to win the Triple Crown and would allow the partners to retain some shares and lifetime breeding rights in the horse. It was agreed to before the Preakness, people familiar with the deal said.

But Elliott Walden, Winstar’s president and chief executive, said a deal had not yet been completed. The partners might wait until September, when it will have owned Justify for two years, to complete a deal so they become eligible for the lower tax rates associated with capital gains.

Henry Field, head of SF’s Newgate Farm, and Eden Harrington, vice president of China Horse Club, are graduates of the Darley Flying Start program, a management and leadership training program for the industry, and have each worked for Coolmore.

American Pharoah, who in 2015 became the first horse in 37 years to sweep the Triple Crown, stands at Coolmore’s farm in Versailles, Kentucky, in the spring. He then shuttles to its Australian farm for the fall breeding season. In the past couple years in the United States, he was commanding about $200,000 per live foal that stands and nurses. Producing an average of 150 live foals from the breeding season in Kentucky, American Pharoah is racking up more than $35 million in stallion fees there. He commands about $50,000 per live foal in Australia.

WinStar, meanwhile, stands American Pharoah’s sire, Pioneerof the Nile, for $110,000 and will likely add Audible, the Florida Derby winner, to the mix.

Bradley Weisbord, who runs BSW Bloodstock, which manages Kumin’s stable along with several others, said that while a deal had not been completed, from an industry perspective, it made sense.

“Kenny Troutt has always run his WinStar Farm as a business,” he said of the owner of WinStar who made his fortune from a long-distance phone company that used a multilevel marketing approach. “On the flip side, Coolmore has always wanted the best.”

He continued: “Sure, it’s probably a tough decision for him and he’s probably going through it thinking, ‘Do I sell or do I keep him,’ but WinStar, SF, China Horse Club, they are traders, and there is a number where it becomes the perfect bloodstock deal, and that is when the buyers and the sellers both walk away with a smile on their face.”

Soros is one of the world’s most successful investors, who might be best-known for his bet in 1992 against the fortunes of the British pound. Soros is said to have made more than $1 billion by shorting the pound — a move that cemented his reputation as one of the shrewdest currency traders. Read the rest of the item here.

Rogue Meets Rogue, Obama and Iran

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While the United States has terminated it’s role in the JCPOA, the Iranian nuclear deal, Europe appears to be dedicated to remain. Meanwhile, Israeli Prime Minister Benjamin Netanyahu is traveling in Europe meeting with leaders on the sole topic of Iran. As this item is published he is meeting with Theresa May of Britain.

***

On May 8, 2018, the President announced his decision to cease the United States’ participation in the Joint Comprehensive Plan of Action (JCPOA), and to begin re-imposing the U.S. nuclear-related sanctions that were lifted to effectuate the JCPOA sanctions relief, following a wind-down period.  In conjunction with this announcement, the President issued a National Security Presidential Memorandum (NSPM) directing the U.S. Department of the Treasury and other Departments and Agencies to take the actions necessary to implement his decision.
Consistent with the President’s guidance, Departments and Agencies will begin the process of  implementing 90-day and 180-day wind-down periods for activities involving Iran that were consistent with the U.S. sanctions relief specified in the JCPOA.  To effectuate the wind-down periods, today the State Department issued the necessary statutory sanctions waivers to provide for a wind-down period and plans to take appropriate action to keep such waivers in place for the duration of the relevant wind-down periods.  As soon as is administratively feasible, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) expects to revoke, or amend, as appropriate, general and specific licenses issued in connection with the JCPOA.  At that time, OFAC will issue new authorizations to allow the wind down of transactions and activities that were authorized pursuant to the revoked or amended general and specific licenses.  At the end of the 90-day and 180-day wind-down periods, the applicable sanctions will come back into full effect.
OFAC posted today to its website additional frequently asked questions (FAQs) that provide guidance on the sanctions that are to be re-imposed and the relevant wind-down periods.
*** Iranian banks must comply with rules on money laundering ... photo

Why the big push on all of this? Iran has launched new uranium enrichment plans with meet the red line. But, could that enrichment exceed agreed limits? Yes and no one would know due in part to refused access by IAEA officials for inspection.

(Reuters) – Iran’s declaration that it could increase its uranium enrichment capacity if a nuclear deal with world powers falls apart risks sailing close to the “red line”, France’s foreign minister said on Wednesday. Supreme Leader Ayatollah Khamenei said on Monday he had ordered preparations to increase uranium enrichment capacity if the nuclear agreement collapsed after the United States withdrew from the deal last month.

It also informed the U.N. nuclear watchdog of “tentative” plans to produce the feedstock for centrifuges, which are the machines that enrich uranium.

“This initiative is unwelcome. It shows a sort of irritation,” Jean-Yves Le Drian told Europe 1 radio. “It is always dangerous to flirt with the red lines, but the initiative taken … remains totally within the framework of the Vienna (nuclear) deal.”

Tensions between Iran and the West have surged since President Donald Trump pulled the U.S. out of the 2015 nuclear deal with Tehran last month, calling it deeply flawed and reimposing unilateral sanctions.

European powers are scrambling to save the deal – under which Iran curbed its nuclear program in return for a lifting of international sanctions – as they regard it as the best chance to stop Tehran developing an atomic bomb.

However, they have warned Iran that if it were not to abide by the terms of the deal, then they would also be forced to pull out and reimpose sanctions as Washington has done.

“If they go to a higher level then yes the agreement would be violated, but they need to realize that if they do then they will expose themselves to new sanctions and the Europeans will not remain passive.”

Le Drian, who said Iran was for now still abiding by its commitments, was speaking a day after Israel’s leader urged France to turn its attention to tackling Iran’s “regional aggression”, saying he no longer needed to convince Paris to quit a 2015 nuclear deal between various world powers with Tehran as economic pressure would kill it anyway.

MSNBC Hires the Organizer of Obama's Iran Echo Chamber as ... photo

** There is yet another item that has bubbled to the surface. Enter Barack Obama.

(AP) — The Obama administration secretly sought to give Iran access — albeit briefly — to the U.S. financial system by sidestepping sanctions kept in place after the 2015 nuclear deal, despite repeatedly telling Congress and the public it had no plans to do so.

An investigation by Senate Republicans released Wednesday sheds light on the delicate balance the Obama administration sought to strike after the deal, as it worked to ensure Iran received its promised benefits without playing into the hands of the deal’s opponents. Amid a tense political climate, Iran hawks in the U.S., Israel and elsewhere argued that the United States was giving far too much to Tehran and that the windfall would be used to fund extremism and other troubling Iranian activity.

The report by the Senate Permanent Subcommittee on Investigations revealed that under President Barack Obama, the Treasury Department issued a license in February 2016, never previously disclosed, that would have allowed Iran to convert $5.7 billion it held at a bank in Oman from Omani rials into euros by exchanging them first into U.S. dollars. If the Omani bank had allowed the exchange without such a license, it would have violated sanctions that bar Iran from transactions that touch the U.S. financial system.

The effort was unsuccessful because American banks — themselves afraid of running afoul of U.S. sanctions — declined to participate. The Obama administration approached two U.S. banks to facilitate the conversion, the report said, but both refused, citing the reputational risk of doing business with or for Iran.

“The Obama administration misled the American people and Congress because they were desperate to get a deal with Iran,” said Sen. Rob Portman, R-Ohio, the subcommittee’s chairman.

Issuing the license was not illegal. Still, it went above and beyond what the Obama administration was required to do under the terms of the nuclear agreement. Under that deal, the U.S. and world powers gave Iran billions of dollars in sanctions relief in exchange for curbing its nuclear program. Last month, President Donald Trump declared the U.S. was pulling out of what he described as a “disastrous deal.”

The license issued to Bank Muscat stood in stark contrast to repeated public statements from the Obama White House, the Treasury and the State Department, all of which denied that the administration was contemplating allowing Iran access to the U.S. financial system.

Shortly after the nuclear deal was sealed in July 2015, then-Treasury Secretary Jack Lew testified that even with the sanctions relief, Iran “will continue to be denied access to the world’s largest financial and commercial market.” A month later, one of Lew’s top deputies, Adam Szubin, testified that despite the nuclear deal “Iran will be denied access to the world’s most important market and unable to deal in the world’s most important currency.”

Yet almost immediately after the sanctions relief took effect in January 2016, Iran began to complain that it wasn’t reaping the benefits it had envisioned. Iran argued that other sanctions — such as those linked to human rights, terrorism and missile development — were scaring off potential investors and banks who feared any business with Iran would lead to punishment. The global financial system is heavily intertwined with U.S. banks, making it nearly impossible to conduct many international transactions without touching New York in one way or another.

Former Obama administration officials declined to comment for the record.

However, they said the decision to grant the license had been made in line with the spirit of the deal, which included allowing Iran to regain access to foreign reserves that had been off-limits because of the sanctions. They said public comments made by the Obama administration at the time were intended to dispel incorrect reports about nonexistent proposals that would have gone much farther by letting Iran actually buy or sell things in dollars.

The former officials spoke on condition of anonymity because many are still involved in national security issues.

As the Obama administration pondered how to address Iran’s complaints in 2016, reports in The Associated Press and other media outlets revealed that the U.S. was considering additional sanctions relief, including issuing licenses that would allow Iran limited transactions in dollars. Democratic and Republican lawmakers argued against it throughout the late winter, spring and summer of 2016. They warned that unless Tehran was willing to give up more, the U.S. shouldn’t give Iran anything more than it already had.

At the time, the Obama administration downplayed those concerns while speaking in general terms about the need for the U.S. to live up to its part of the deal. Secretary of State John Kerry and other top aides fanned out across Europe, Asia and the Middle East trying to convince banks and businesses they could do business with Iran without violating sanctions and facing steep fines.

“Since Iran has kept its end of the deal, it is our responsibility to uphold ours, in both letter and spirit,” Lew said at the Carnegie Endowment for International Peace in March 2016, without offering details.

That same week, the AP reported that the Treasury had prepared a draft of a license that would have given Iran much broader permission to convert its assets from foreign currencies into easier-to-spend currencies like euros, yen or rupees, by first exchanging them for dollars at offshore financial institutions.

The draft involved a general license, a blanket go-ahead that allows all transactions of a certain type, rather than a specific license like the one given to Oman’s Bank Muscat, which only covers specific transactions and institutions. The proposal would have allowed dollars to be used in currency exchanges provided that no Iranian banks, no Iranian rials and no sanctioned Iranian individuals or businesses were involved, and that the transaction did not begin or end in U.S. dollars.

Obama administration officials at the time assured concerned lawmakers that a general license wouldn’t be coming. But the report from the Republican members of the Senate panel showed that a draft of the license was indeed prepared, though it was never published.

And when questioned by lawmakers about the possibility of granting Iran any kind of access to the U.S. financial system, Obama-era officials never volunteered that the specific license for Bank Muscat in Oman had been issued two months earlier.

According to the report, Iran is believed to have found other ways to access its money, possibly by exchanging it in smaller quantities through another currency.

The situation resulted from the fact that Iran had stored billions in Omani rials, a currency that’s notoriously hard to convert. The U.S. dollar is the world’s dominant currency, so allowing it to be used as a conversion instrument for Iranian assets was the easiest and most efficient way to speed up Iran’s access to its own funds.

For example: If the Iranians want to sell oil to India, they would likely want to be paid in euros instead of rupees, so they could more easily use the proceeds to purchase European goods. That process commonly starts with the rupees being converted into dollars, just for a moment, before being converted once again into euros.

U.S. sanctions block Iran from exchanging the money on its own. And Asian and European banks are wary because U.S. regulators have levied billions of dollars in fines in recent years and threatened transgressors with a cutoff from the far more lucrative American market.

More Slime from The SWAMP

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Mitch McConnell cancels Senate’s traditional August recess

In a brief written statement, he said: “Senators should expect to remain in session in August to pass legislation, including appropriations bills, and to make additional progress on the president’s nominees.” More here.

At least that is something right?

All of us are mad, no furious with members of Congress. Imagine when some of those members are more angry than YOU at the system?

Leadership works with lobbyists and then leaks to the media. And then you think you have the whole story. Ah, not at all.

Just a teaser for Episode 3 is below.

The Swamp from Daniel Lippman on Vimeo.

In 2017, Congressman Ken Buck of Colorado wrote a book titled Drain The Swamp. 

It is a great primer and a book that can be read in a day. What does go on behind closed doors in Congress? Yep, you will learn it fast. What about those committee assignments and chairmanships? Yep, they are bought. Have you considered discretionary spending? It is illegal. A large handful of congressional members are in fact on our side. Some are so disgusted they are leaving Congress.

Run out and buy the book: Drain the Swamp: How Washington Corruption is Worse than You ThinkCongressman Buck is hardly a rebel but there are those colleagues that say he is. BARTELS: Secretary Wayne Williams’ Denver Broncos shirt ... Yes due to the weapon on the wall for which he was investigated a few years ago.

Remember that shooting at the ballfield? Well, as an aside, prior to that these congressional members packed heat. Likely more are doing the same now.

Here are the members of the House Freedom Caucus who say they currently carry, or did as of 2013 (all are Republicans):

  • Alabama Rep. Gary Palmer
  • Alabama Rep. Mo Brooks
  • Arizona Rep. Paul Gosar
  • Arizona Rep. Matt Salmon
  • Arizona Rep. David Schweikert
  • Arizona Rep. Trent Franks
  • Colorado Rep. Ken Buck
  • Florida Rep. Ted Yoho
  • Florida Rep. Bill Posey
  • Indiana Rep. Marlin Stutzman
  • Louisiana Rep. John Fleming
  • Ohio Rep. Jim Jordan
  • South Carolina Rep. Jeff Duncan
  • South Carolina Rep. Mick Mulvaney
  • Tennessee Rep. Scott Desjarlais
  • Texas Rep. Randy Weber
  • Virginia Rep. Dave Brat

Brooks said the Second Amendment is the “bedrock” of all other amendments, and the pro gun-control argument that the Second Amendment only applies to a militia-owning firearms is preposterous.

“The purpose of the Second Amendment was to ensure that the citizenry could protect itself from a dictatorial and out-of-control government,” Brooks told TheDCNF.

“It has long been a primary goal of kings, dictators, communists, fascists and the like to disarm the citizenry so that there is minimal risk of opposition to centralized government, dictating to the citizenry that is unarmed and defenseless, and unable to assert their rights,” he said. (some of them have already left congress)

***

AI: Machine Detection of Missile/Nuclear Launches, no Google

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Primer: The U.S. holds an enviable lead in pushing artificial-intelligence technology out of labs and into real-world applications. Thank companies like Alphabet (GOOGL), Facebook (FB) and Apple (AAPL) for that.

But China’s government and technology elites aim to overtake the U.S. in AI by 2030 — or so they proclaimed in July at a Beijing political gathering.

Good luck with that.

Yes, China has many strengths as it sets out for worldwide dominance in AI technology. Its internet giants Baidu (BIDU), Alibaba Group Holdings (BABA) and Tencent Holdings (TCEHY) are also pouring money into AI research and hiring top scientists.

China’s huge population will generate massive raw data to train AI systems in how to make predictions.  So there’s good reason to think China will make breakthroughs in developing computer algorithms — the software programs that aim to replicate the human ability to learn, reason and make decisions.

China also has a major weakness: a semiconductor industry that still lags the U.S. in making high-end electronic processors. Chinese companies buy AI chips mainly from Nvidia (NVDA), based in Santa Clara, Calif. Intel (INTC), the dominant supplier of brainy chips for personal computers, is pushing fast into AI. More here.

Google Employees Quit Over Controversial Pentagon Contract Some employees even quit.

Due to Google employees signing a petition for the Pentagon’s Project Maven, the AI project which is a drone contract. Project Maven is known as Algorithmic Warfare Cross-Functional Team. Google at the time of the contract beat out other bidders including Microsoft, Amazon and IBM. More here on Google.

Google will abandon Project Maven, your project of ... photo

WASHINGTON (Reuters) – The U.S. military is increasing spending on a secret research effort to use artificial intelligence to help anticipate the launch of a nuclear-capable missile, as well as track and target mobile launchers in North Korea and elsewhere.

The effort has gone largely unreported, and the few publicly available details about it are buried under a layer of near impenetrable jargon in the latest Pentagon budget. But U.S. officials familiar with the research told Reuters there are multiple classified programs now under way to explore how to develop AI-driven systems to better protect the United States against a potential nuclear missile strike.

If the research is successful, such computer systems would be able to think for themselves, scouring huge amounts of data, including satellite imagery, with a speed and accuracy beyond the capability of humans, to look for signs of preparations for a missile launch, according to more than half a dozen sources. The sources included U.S. officials, who spoke on condition of anonymity because the research is classified.

Forewarned, the U.S. government would be able to pursue diplomatic options or, in the case of an imminent attack, the military would have more time to try to destroy the missiles before they were launched, or try to intercept them.

“We should be doing everything in our power to find that missile before they launch it and make it increasingly harder to get it off (the ground),” one of the officials said.

The Trump administration has proposed more than tripling funding in next year’s budget to $83 million for just one of the AI-driven missile programs, according to several U.S. officials and budget documents. The boost in funding has not been previously reported.

While the amount is still relatively small, it is one indicator of the growing importance of the research on AI-powered anti-missile systems at a time when the United States faces a more militarily assertive Russia and a significant nuclear weapons threat from long-time foe North Korea.

** https://bloximages.newyork1.vip.townnews.com/stltoday.com/content/tncms/assets/v3/editorial/c/d9/cd996bb2-06f0-51ae-ab8b-10a327dcbc19/5b166e9ca3e4c.image.jpg?resize=1200%2C902

“What AI and machine learning allows you to do is find the needle in the haystack,” said Bob Work, a champion of AI technology who was deputy defense secretary until last July, without referring to any individual projects.

One person familiar with the programs said it includes a pilot project focused on North Korea. Washington is increasingly concerned about Pyongyang’s development of mobile missiles that can be hidden in tunnels, forests and caves. The existence of a North Korea-focused project has not been previously reported.

While that project has been kept secret, the military has been clear about its interest in AI. The Pentagon, for example, has disclosed it is using AI to identify objects from video gathered in its drone program, as part of a publicly touted effort launched last year called “Project Maven.”

Still, some U.S. officials say AI spending overall on military programs remains woefully inadequate.

AI ARMS RACE

The Pentagon is in a race against China and Russia to infuse more AI into its war machine, to create more sophisticated autonomous systems that are able to learn by themselves to carry out specific tasks. The Pentagon research on using AI to identify potential missile threats and track mobile launchers is in its infancy and is just one part of that overall effort.

There are scant details on the AI missile research, but one U.S. official told Reuters that an early prototype of a system to track mobile missile launchers was already being tested within the U.S. military.

This project involves military and private researchers in the Washington D.C. area. It is pivoting off technological advances developed by commercial firms financed by In-Q-Tel, the intelligence community’s venture capital fund, officials said.

In order to carry out the research, the project is tapping into the intelligence community’s commercial cloud service, searching for patterns and anomalies in data, including from sophisticated radar that can see through storms and penetrate foliage.

Budget documents reviewed by Reuters noted plans to expand the focus of the mobile missile launcher program to “the remainder of the (Pentagon) 4+1 problem sets.” The Pentagon typically uses the 4+1 terminology to refer to China, Russia, Iran, North Korea and terrorist groups.

TURNING TURTLES INTO RIFLES

Both supporters and critics of using AI to hunt missiles agree that it carries major risks. It could accelerate decision-making in a nuclear crisis. It could increase the chances of computer-generated errors. It might also provoke an AI arms race with Russia and China that could upset the global nuclear balance.

U.S. Air Force General John Hyten, the top commander of U.S. nuclear forces, said once AI-driven systems become fully operational, the Pentagon will need to think about creating safeguards to ensure humans – not machines – control the pace of nuclear decision-making, the “escalation ladder” in Pentagon speak.

“(Artificial intelligence) could force you onto that ladder if you don’t put the safeguards in,” Hyten, head of the U.S. Strategic Command, said in an interview. “Once you’re on it, then everything starts moving.”

Experts at the Rand Corporation, a public policy research body, and elsewhere say there is a high probability that countries like China and Russia could try to trick an AI missile-hunting system, learning to hide their missiles from identification.

There is some evidence to suggest they could be successful.

An experiment by M.I.T. students showed how easy it was to dupe an advanced Google image classifier, in which a computer identifies objects. In that case, students fooled the system into concluding a plastic turtle was actually a rifle. here

Dr. Steven Walker, director of the Defense Advanced Research Projects Agency (DARPA), a pioneer in AI that initially funded what became the Internet, said the Pentagon still needs humans to review AI systems’ conclusions.

“Because these systems can be fooled,” Walker said in an interview.

DARPA is working on a project to make AI-driven systems capable of better explaining themselves to human analysts, something the agency believes will be critical for high stakes national security programs.

‘WE CAN’T BE WRONG’

Among those working to improve the effectiveness of AI is William “Buzz” Roberts, director for automation, AI and augmentation at the National Geospatial Agency. Roberts works on the front lines of the U.S. government’s efforts to develop AI to help analyze satellite imagery, a crucial source of data for missile hunters.

Last year, NGA said it used AI to scan and analyze 12 million images. So far, Roberts said, NGA researchers have made progress in getting AI to help identify the presence or absence of a target of interest, although he declined to discuss individual programs.

In trying to assess potential national security threats, the NGA researchers work under a different kind of pressure from their counterparts in the private sector.

“We can’t be wrong … A lot of the commercial advancements in AI, machine learning, computer vision – If they’re half right, they’re good,” said Roberts.

Although some officials believe elements of the AI missile program could become viable in the early 2020s, others in the U.S. government and the U.S. Congress fear research efforts are too limited.

“The Russians and the Chinese are definitely pursuing these sorts of things,” Representative Mac Thornberry, the House Armed Services Committee’s chairman, told Reuters. “Probably with greater effort in some ways than we have.”

 

Yet Another American Caught Spying for China

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It is an epidemic, only no one will admit that. Mr. Hansen’s charges are found here.

WASHINGTON (Reuters) – A former officer with the U.S. Defense Intelligence Agency was arrested over the weekend for allegedly trying to spy on the United States for China, the Justice Department said on Monday.

The Federal Bureau of Investigation took Ron Rockwell Hansen, 58, into custody on Saturday while he was on his way to the Seattle-Tacoma International Airport to get a connecting flight to China.

The department said he has been accused of trying to transmit national defense information to China and with receiving “hundreds of thousands of dollars” while acting illegally as an agent for the Chinese government.

Reuters could not immediately learn who may be representing Hansen in the case.

Hansen is the latest person in a string of former U.S. intelligence officers to be swept up in criminal probes related to spying for the Chinese.

Earlier this year, former CIA case officer Jerry Chun Shing Lee was indicted for conspiring to gather or deliver national defense information to China.

Another former U.S. intelligence employee named Kevin Mallory is on trial in Virginia, also in connection with selling secrets to China.

In the new case announced Monday, prosecutors said that Hansen speaks fluent Mandarin-Chinese and Russian.

He served as a case officer for the Defense Intelligence Agency while on active military duty from 2000-2006, and later continued that line of work as a civilian employee and a contractor.

He also held a top secret clearance for years.

The government said that between 2013 and 2017, he traveled between the two countries attending conferences and provided the information he learned to China’s intelligence service.

He was paid via wire transfers, cash and credit cards. He also allegedly improperly sold export-controlled technology.

“His alleged actions are a betrayal of our nation’s security and the American people and are an affront to his former intelligence community colleagues,” said John Demers, the head of the Justice Department’s National Security Division.

According to court records, the FBI started investigating his activities in 2014. He was unaware of the probe, and participated in nine voluntary meetings with federal agents in Salt Lake City. Utah.

Prosecutors say that during his meetings, he told the FBI that Chinese intelligence had tried to recruit him, offered to cooperate as a source and even provided thumb drives to the FBI that contained classified materials he was not authorized to have.

Hansen appeared before a magistrate judge in Seattle on Monday, and is charged in a 15-count complaint.

Mr Hansen, who lives in Syracuse, Utah, was charged with attempting to gather or deliver national defense information to aid a foreign government.

Other charges – there are 15 in total – include acting as an unregistered foreign agent for China, bulk cash smuggling, structuring monetary transactions and smuggling goods from the US.

photo, Mallory

*** Now about those phones and Kevin Mallory:

The phone the Chinese intelligence operatives gave Kevin Mallory was a specialized spy gadget. If it had worked like it was supposed to, he might be a free man today.

The former CIA officer, on trial in Alexandria federal court on espionage charges, freely told his old colleagues that he had been approached by those spies on social media in February of 2017. He said he had been invited on two trips to China and given a Samsung Galaxy phone with special encryption capabilities.

What he didn’t tell his U.S. intelligence contacts, and, according to prosecutors, what he thought they would never learn, was that he also traded classified documents to the Chinese agents in exchange for $25,000.

Mallory, a 61-year-old from Leesburg, Va., who also served in the Defense Intelligence Agency, State Department and U.S. Army, was arrested last spring. While prosecutors say he was selling secrets, he contends he was trying to expose the Chinese spies. Whatever jurors decide, the veteran intelligence operative’s trial is offering a glimpse into some of the inner workings of both Chinese espionage and American attempts to counter it.

It’s “very rare” for a foreign intelligence service’s device “to be revealed like that,” FBI agent Paul Lee testified on Thursday. The phone would have cost the Chinese government a lot of money to develop, he had told Mallory last year.

Mallory explained in meetings with the CIA and FBI, which were recorded and played for the jury, that the phone contained an app designed to facilitate steganography, or the hiding of information inside of an image. Documents were merged into a file that appeared as an image — in this case, the Chinese chose horses grazing in front of a mountain range.

To send the files through the secure version of the app, which was a customized version of the Chinese messaging service WeChat, both parties had to be online and type in a password. (The one built into the application, Mallory told the officials, was the word “password,” in English.)

Mallory told the FBI that the Chinese spies told him they had found a “special way” to make the app safer.

But their system was flawed. James Hamrock, an engineer who analyzed the phone for the FBI, said he believes the encrypted application crashed at one point, creating an unintentional log of Mallory’s communications with one of the Chinese spies.

If the app had not crashed, Hamrock testified, he likely would not have been able to see Mallory’s communications. Instead, as Mallory and FBI agents met in a hotel room in Ashburn, Va., last May to look at the phone, they saw conversations in which Mallory had discussed delivering “more documents,” including something related to a foreign intelligence service. (The name of that service was redacted from exhibits shown in court).

“I’m — I’m surprised it kept this much,” Mallory told the agents as they examined the phone.

But defense attorneys stressed that U.S. law enforcement would never have known about the phone — let alone have been able to examine it — had Mallory not brought it to them.

Mallory maintains that as soon as he realized the Chinese recruiters who had approached him on LinkedIn were spies, he decided to deliver them to American hands.

“Kevin Mallory has worn a white hat throughout his career, and he did not take it off for a relatively small amount of money,” public defender Geremy Kamens said in his opening statement. “If he was motivated by money, he would have kept his mouth shut.”

Instead, Mallory caught the attention of authorities because he repeatedly contacted a CIA employee from his church and a CIA contractor he worked with from 2010 to 2012 to say he believed he was in touch with Chinese intelligence.

In a text to the contractor, a covert operative who testified from behind a screen under the pseudonym John Doe, Mallory said the operatives “asked me a few questions that could have only come from our side of the house.”

Doe testified that he took that to mean that the Chinese had penetrated the CIA.

Doe said Mallory’s request to be put in touch with someone in the agency’s East Asia Division “seemed odd.”

Ralph Stevenson, a CIA resources officer, agreed. When Mallory contacted him in a similar manner, Stevenson said, he deleted the texts and responded with a terse email.

At the Montgomery Chinese Branch of the Mormon Church that weekend, Stevenson upbraided Mallory. Read more here.

*** One last item:

China’s influence in New Zealand is so extensive that it threatens the traditionally close intelligence contacts between New Zealand and its Western allies, according to a report written by the Canadian spy agency.

The report, entitled China and the Age of Strategic Rivalry, was authored by experts at the Canadian Security Intelligence Service (CSIS). It contains a summary of views expressed by participants at an academic outreach workshop that was organized in Canada by the CSIS. In a section focusing on Chinese “interference in democratic systems”, the report suggests that, despite its small size, New Zealand is “valuable to China […] as a soft underbelly through which to access Five Eyes intelligence”. In recent years, claims the report, Beijing has adopted “an aggressive strategy” that has sought to co-opt political and economic elites in New Zealand as a means of influencing political decision making in the country. As part of that process, China seeks to gain advantages in trade and business negotiations, suppress negative views of China, facilitate espionage and control the views of the Chinese expatriate community in New Zealand, according to the report. Ultimately, Beijing seeks to “extricate New Zealand from […] its traditional [military and intelligence] partners]” as a means of asserting its regional and —eventually— global influence, the report concludes.

In a separate but connected development, it emerged this week that China expert Peter Mattis told an American Congressional committee last month that New Zealand’s position in the Five Eyes alliance was tenuous due to China’s influence. Mattis, a former China analyst for the United States Central Intelligence Agency, was speaking before the US-China Economic and Security Review Commission, a group of experts that advise the US Congress. He told the Commission that the influence of the Chinese Communist Party in New Zealand is so deep that it raises questions about whether the Pacific Ocean country can continue to share intelligence with the other members of the Five Eyes alliance.

On Wednesday, New Zealand’s Prime Minister Jacinda Ardern emphatically dismissed questions about her country’s role in the Five Eyes alliance. She told reporters in Wellington that the issue of New Zealand’s Five Eyes membership had “never been raised” with her “or anyone else” by Five Eyes partners. Ardern added that her government received its information “from official channels, not opinions expressed at a workshop”.