Bayrock in Money Laundering Scheme

Trump business partner accused of involvement in Dutch-based money laundering scheme

  • sater-en-trump

    Dutch letter box companies implicated in million-dollar fraud

    The American real estate development company Bayrock, through which Donald Trump constructed hotels and apartment complexes, used Dutch letter box companies in a network suspected of being involved in money laundering. A ZEMBLA investigation suggests that Bayrock siphoned off $1.5 million dollars by setting up a corporate structure in the Netherlands in 2007. In New York, Bayrock also stands accused of large-scale tax fraud. This incriminating information could place Donald Trump in an extremely difficult position, claims attorney F. Oberlander, who is prosecuting Bayrock on behalf of the State of New York: “The maximum jail term would be 30 years. So you’re in really serious trouble.”

    In 2005, Donald Trump became 18% owner of an hotel-condominium known as Trump SoHo. Bayrock, the other owner, is accused of perpetrating fraud on a grand scale through, among other things, Trump SoHo. According to US law, this means that Trump is jointly liable for Bayrock’s criminal activities. Oberlander concludes:
    “Anybody running a business through a pattern of crime is guilty of racketeering. Anybody knowing what they’re doing and are helping is guilty of racketeering conspiracy. They go to jail.”

    All Bayrock wants is to make clear to ZEMBLA that the Dutch corporate construction was established on the advice of an external legal counsel. ZEMBLA discovers that the firm in question is Bracewell & Giuliani. Rudy Giuliani, the former mayor of New York, and part owner of the law firm at the time, is also a Trump confidante. ZEMBLA has access to correspondence between the law firm and the Dutch director of a trust company in Amsterdam, which leaves no doubt as to the ultimate beneficiary owners of the Dutch business construction: the director of Bayrock and the Khrapunov family from Kazakhstan.

    Viktor Khrapunov is a fugitive ex-mayor and governor from Kazakhstan. The Kazakhstan government accuses Khrapunov of embezzling hundreds of millions of state assets. In 2007, Bayrock and the Khrapunov family founded the Dutch joint venture KazBay B.V. ZEMBLA has copies of the act of incorporation, bank statements and internal communications showing how the suspected money laundering scheme was set up. “It was designed to get millions of dollars out of New York into Europe. Through KazBay. KazBay was just a conduit”, asserts attorney Oberlander.

    The Dutch director of KazBay B.V. tells ZEMBLA that he has no knowledge of his clients’ dubious backgrounds. In 2007, the year that the Dutch letter box companies were established, Viktor Khrapunov’s alleged criminal dealings become public knowledge. Around the same time, it also becomes clear that Felix Sater, one of the Bayrock owners, has concealed his criminal past and mafia connections.

    Image result for felix sater

    For years, the Dutch Central Bank has been concerned that Dutch trust companies are failing to comply with legislation. Over half of the companies investigated by the Dutch Central Bank are in breach of the regulations, such as subjecting their clients to rigorous screening. Investigations performed by the supervisory body reveal that hundreds of politicians from Russia and Kazakhstan make use of Dutch trust companies. Frank Elderson, director of the Dutch Central Bank: “There are no legal stipulations forcing you to do business with a former political hot-shot from Russia or any other high risk nation.”

    Six months ago, the Financial Times reported that, in 2013, the Khrapunov family had bought three apartments in Trump SoHo to the tune of 3.1 million dollars. A sale from which Trump benefitted as joint owner. The White House, the Trump Organization and Viktor Khrapunov decline to answer ZEMBLA’s questions. In the episode ‘The Dubious Friends of Donald Trump: Part 1 – the Russians’, ZEMBLA explores the possible implications of these shady business dealings for the United States’ 45th president.

     

*** More on the letter box issue:  Related reading/ EU to close ‘letterbox’ company tax loopholes

“Nearly one-third of all foreign profits reported by US corporations in 2003 came from just three small, low-tax countries: Bermuda, the Netherlands, and Ireland,” said a White House factsheet in 2009. Like the Queen in Shakespeare’s ‘Hamlet’ who protested that ‘The lady doth protest too much, methinks,’ the Dutch government hypocritically objected to the Netherlands being dubbed a tax haven and the White House deleted the line. The Dutch tax haven, has about 20,000 letter-box companies and in recent years, Facebook joined U2, the Irish rock group, to avail of the system. The Netherlands also hosts thousands of foreign financial vehicles. Bloomberg reports that a bookkeeper’s home office in Amsterdam, doubles as the headquarters for a Yahoo! Inc. offshore unit.  It says as a deficit-strapped Europe raises retirement ages and taxes on the working class, the Netherlands’ role as a $13tn relay station on the global tax-avoiding network is prompting a backlash.

Bloomberg says that attracted by the Netherlands’ lenient policies and extensive network of tax treaties, companies such as Yahoo, Google, Merck & Co and Dell have moved profits through the country. Using techniques with nicknames such as the “Dutch Sandwich,” multinational companies routed €10.2tn in 2010 through 14,300 Dutch “special financial units,” according to the Dutch Central Bank. Such units often only exist on paper, as is allowed by law.

Google, IBM and Italian oil and gas group ENI head the list of companies using letter-box companies to cut their Dutch tax bills to between 0 and 5%, the Volkskrant daily said last week.

Trump, Peace Deal with Palestinians, Easy

So far there has been no read out if Trump asked or rather demanded that the Palestinian authority to stop paying families of terrorists.

The PA, which receives millions in funding from U.S. taxpayers, spends roughly 8 percent of its annual budget, some $300 million a year, on salaries for terrorists who are imprisoned in Israel as well as the families of terrorists who attacked the Jewish state.

Mahmood Abbas, the head of the Palestinian Authority met with President Trump at the White House. Abbas brought the following people with him:

So who are these people?

Well Usama Qawasmeh in April of last year said that the West sponsors Islamic extremism and that 9/11 was no coincidence.

Saeb Erikat was one of the negotiators of the Oslo Accords and said there will never be peace if Trump moves the embassy to Jerusalem.

Ziad Abu Amr is an author, negotiator and foreign minister in charge of economics for Gaza. By the way, he was educated at Georgetown.

Hosso Zomlot is the Palestinian ambassador to the United States and continues to broadcast Israel as an occupier while declaring a two state solution is an international responsibility.

Ahmad Assaf, in 2011 said: ‘if armed resistance can accomplish the goals of the Palestinian people, we will not hesitate even for a second.’

***

So there was a working lunch at the Trump White House.

Working lunch with discussions of economic and trade opportunities?

“I’m committed to working with Israel and the Palestinians to reach an agreement,” Trump said. “I will do whatever is necessary to facilitate the agreement.”

Acknowledging an Israeli-Palestinian accord is seen as the “toughest deal to make,” Trump told Abbas, “Perhaps we can prove them wrong” – before heading into a meeting with the Palestinian Authority president.

Abbas told Trump moments earlier, “Mr. President, with you we have hope.”

The peace process has been stalled since 2014 when former Secretary of State John Kerry’s effort to lead the sides into peace talks collapsed. Since then, there have been no serious attempts to get negotiations restarted. The Obama administration spent its last months in office attempting to preserve conditions for an eventual resumption.

“We hope this will be a new beginning,” Abbas told Palestinians at a meeting in Washington on the eve of the talks.

During remarks alongside Trump at the White House, Abbas – through a translator – stressed that his people want a Palestinian state with the capital of East Jerusalem and borders along the pre-1967 lines.

Israel rejects the 1967 lines as a possible border, saying it would impose grave security risks.

Trump stressed that there can be no lasting peace unless Palestinian leaders speak in a unified voice against “incitement … to violence and hate.”

He also was expected to press Abbas to end payments to families of Palestinians killed or held in Israeli jails, which critics decry as payments for terrorism. Republicans lawmakers have urged a halt to such payments.

While Abbas will be challenged on the payments, officials said Trump will reiterate his belief that Israeli settlement construction on land claimed by the Palestinians does not advance peace prospects.

In his Wednesday comments, Abbas also criticized ideas for a “one state” peace agreement, saying it could mean “racial discrimination” or an apartheid-like system.

In a February news conference with Israeli Prime Minister Benjamin Netanyahu, Trump broke with longtime U.S. policy by raising the one-state idea and withholding clear support for an independent Palestine, though officials quickly stressed he would support any arrangement agreed by the two sides.

Another contentious issue: Trump’s campaign promise to move the U.S. Embassy in Israel from Tel Aviv to Jerusalem. The symbolic relocation would essentially recognize Jerusalem as Israel’s capital. Abbas and other Arab leaders have said doing so would inflame already simmering tensions.

Since taking office, Trump has backed away from the pledge while saying he’s still discussing it. On Tuesday, Vice President Mike Pence said the White House was giving “serious consideration” to the idea. More here.

College Education is in a Tailspin, Foreign Made?

November of 2016, this site published a related article: Foreign Spies on our College Campuses

***

Retired Col. Larry Sellin, PhD wrote in part under the title “Replace and Repeal Universities“:

Academic political intolerance or Totalitarianism 101 is both deliberate and as old as the Russian Revolution.

It is based on an essay “Repressive Tolerance” written in 1965 by Herbert Marcuse, an adherent of the Soviet-controlled Frankfurt School, which was the cultural arm of the Communist International founded to undermine western Judeo-Christian democracy from within.

Fred Bauer, in his article “The Left and ‘Discriminating Tolerance,'” captures Marcuse’s inverted logic and identifies the origin of the political intolerance presently practiced at U.S. academic institutions:

“Marcuse argued that, because of the radical repressiveness of Western society, a tolerance for all viewpoints actually contributed to social oppression. A pervasive network of assumptions and biases implicitly privileges the viewpoint of the powerful, so that seemingly ‘equal’ presentations of opposite opinions actually end up benefiting the viewpoint of the powerful. He offered the example of a magazine running a piece criticizing the FBI along with one praising the FBI. Fair and balanced? Not so fast, Marcuse said: ‘the chances are that the positive [story] wins because the image of [the FBI] is deeply engraved in the mind of the people.’ Because of social programming, the inhabitants of a given society automatically favor certain values. The ideological playing field’s lack of levelness means that seemingly equal presentations of ideas are not really equal.” Full article here.

*** Yes this is proven and bad enough, but there is more.

On April 13-15, the King Fahd Center for Middle East Studies at the University of Arkansas held a symposium on so-called “honor violence,” as exemplified by honor killings, forced marriage, and other such delightful acts.

The Center, as its website informs us, “was founded with a $20 million endowment from the Saudi government in the mid-1990s.  An initial endowment of $2 million, dedicated toward language, literary translation and publication was followed by a much larger $18 million gift designed to spark the foundation of a comprehensive Middle East Studies program at the undergraduate and graduate levels.” Read more here.

Okay, then we have this one:

The FBI raided the school 4…..FOUR years ago!

In an exclusive investigation, Fox News reports:

Based just four miles from the Pentagon in northern Virginia is an innocuous-sounding online school for “management and technology” – which a Fox News investigation reveals has been at the center of multiple federal probes about its leadership’s alleged ties to the Chinese military and whether thousands of records from U.S. service members were compromised.

The University of Management and Technology in Rosslyn, Va., which opened in 1998, touts a campus in Beijing and “partnerships” with universities around the world. The U.S. taxpayer-funded school claims to have had 5,000 graduates in the last five years and to be “especially proud of our students stationed in US military bases around the globe.”

However, there is another side to the school’s leadership that drew the attention of the FBI, the Justice Department, the Pentagon, Immigration and Customs Enforcement, and the Naval Criminal Investigative Service (NCIS) since at least 2012 — and perhaps as early as 2009.

In December 2012, the FBI made two very public raids of UMT and the northern Virginia home of university president Yanping Chen Frame and its academic dean, her husband J. Davidson Frame. Documents reviewed by Fox News show it was a counter-intelligence case, known as a “200d,” one of the most highly sensitive categories for a federal probe.

Photos, exclusively obtained by Fox News, appear to show Chen as a young officer in the People’s Liberation Army, the military wing of China’s communist party. Another photo shows Frame saluting his wife, Chen, who is holding a uniform. Three independent experts said it was a Chinese military colonel’s uniform.

Yet since those FBI raids, UMT has continued to collect more than $6 million from Defense Department tuition assistance programs as well as the Department of Veterans Affairs through the post-9/11 GI bill.

“It’s a bad deal for the soldiers, and it’s a bad deal for the taxpayer,” Stephen Rhoads, a military veteran turned whistleblower who says he worked with the FBI on the case, told Fox News in an exclusive interview. “Nobody’s getting what they paid for.”

Rhoads said he worked at UMT recruiting vets when the FBI approached him in 2012 regarding the federal investigation. Emails and other documents reviewed by Fox News corroborate key elements of Rhoads’ story.

“One of the first sentences she [Chen] ever threw out — after she found out I was an Army officer, was, ‘Well … I was a colonel in the army,’” Rhoads explained. “During our first face-to-face encounter, absolutely … she did not deny it.”

Rhoads said he thought Chen meant the U.S. Army, and asked whether she trained in Texas. “She laughed and said, ‘Oh, no, I was in the Chinese army, you know.’”

Chen, 64, came to the United States in 1987 from Beijing on a non-immigrant visa with her daughter Lele Wang. The Chinese government funded Chen’s research at George Washington University where she received a Ph.D. in Public Policy in 1999, the year after UMT was created.

While Rhoads says Chen was upfront about her Chinese military experience, he claimed she hid those ties on immigration applications. Fox News reviewed Chen’s immigration records where she consistently denied ties to the Chinese or any foreign military. When asked, “Have you ever been a member of, or in any way affiliated with, the communist party or any other totalitarian regime?” Chen checked “no.” She would later become a naturalized U.S. citizen.

While there are no U.S. laws preventing a naturalized citizen from running a school like UMT, the Fox News investigation found that Chen’s ties to the Chinese military appear to run deep.

Three outside experts consulted by Fox News confirmed the authenticity of the Chinese uniforms in the photos of Chen and Frame.

“If somebody was wearing that uniform, I would say that there’s a very great likelihood that they were in the People’s Liberation Army,” Dennis Blasko, a leading Chinese military expert said, referring to the photo of what appears to be Chen in uniform.

Asked about the photo of Frame saluting his wife, Blasko observed, “This is a P.L.A. officer’s uniform — active duty — from between 1987 and 2007 … And from the epaulettes, we can see this — three stars and two red stripes would be a full colonel.”

Blasko emphasized that P.L.A. insignia can only be purchased with the permission of the Chinese military, and “you would have to have a certificate from your unit to buy [it.]”

Blasko, a West Point graduate who worked as a military attache in China, wrote “The Chinese Army Today: Tradition and Transformation for the 21st Century,” one of the definitive books about the Chinese military.

In her George Washington University dissertation, Chen thanks her father, a P.L.A. general, who directed arms and technology development. “My father, General Chen Bin, gave me the inspiration to pursue this area of study,” Chen wrote. “As former Chairman of COSTIND (1982-87), he was an important player in supporting and directing the (Chinese) space program.”

In her 2012 FBI interview, Chen denied she ever was a colonel in the P.L.A., emphasizing she had worked as a doctor in the Chinese space program. Chen said it was a “civilian agency.” The interview summary suggests federal agents challenged Chen’s characterization. Outside experts told Fox News the Chinese civilian and military space programs are intertwined.

While Chen’s immigration application is more than a decade old, and past the five-year statute of limitations, there may be a “continuation” of fraud, according to Ray Fournier who worked with the State Department’s office of diplomatic security for more than 20 years. Fournier, an expert on visa and passport fraud, worked for the Joint Terrorism Task Force in San Diego, where his investigative work led to an arrest warrant for the American-born cleric Anwar Awlaki, who was later killed by the CIA.

Fournier said, “If she has marked ‘no’ on the petition, but if in fact, the answer is yes … then we have a false statement. And where that comes into play, most assuredly, is in the arena of passport fraud. It is this application.” With each renewal of Chen’s U.S. passport, Fournier said, investigators should determine whether the falsehood was repeated. “These are issues of inadmissibility,” he said.

While going through the immigration process, Chen was also launching what would become a multi-million-dollar online academy. But that academy’s work would eventually attract the attention of federal investigators, who questioned whether students’ records were remotely accessed from China.

Before the 2012 raid, Chen’s daughter Lele Wang who also works at UMT, told the FBI that “‘Contractors’ in the UMT Beijing Office have [administrator] privileges” to access the student database.

Rhoads said UMT recruited service members who provided their military history when they enrolled. “It got uploaded into an O-drive, they called it … their personal military bio, you know, where they were trained, how they were trained, how long, that could be remotely accessed.”

Rhoads said Chen had a particular interest in Ohio’s Wright-Patterson Air Force Base, which is a research and technology hub.

And there was more. “She wanted me to go out to these remote reserve and National Guard centers, you know … in small-town America and start gettin’ U.S. soldiers from those centers. Get their information, basically. Who’s out there in the woods? How many units we got?”

Rhoads recalled to Fox News that he was instructed by the FBI to tell Chen that he was going to testify before a Virginia grand jury. “They wanted to, I guess see how … she would react.”

At the time, Rhoads said Chen had no idea he was working with the bureau.

He said, “Well, at this point, she didn’t know I was working for them at all. And she’s like, ‘Oh, you don’t tell them anything. We don’t know each other. You don’t … know what you don’t know,’ was her buzz phrase. ‘You don’t — you don’t know I was a colonel in the P.L.A. They’ll never have proof to say that’.”

Emails obtained by Fox News show Rhoads and at least one FBI agent alerted the Defense Department, but another Memorandum of Understanding (MOU) was signed in 2014 through 2019 allowing UMT to collect millions in federal taxpayer aid.

An FBI agent in one email exchange wrote, “I let my management and the AUSAs [assistant U.S. attorneys] know about her renewal with DoD. Incredible.”

Asked about the renewal, as well as whether DoD personnel were warned and additional steps were taken to vet UMT, the DoD chief for Voluntary Education Assistance, Dawn Bilodeau, referred questions to Pentagon spokesperson Laura Ochoa. In an email, Ochoa said, “In light of reports regarding University of Management and Technology (UMT), the Department is reviewing the DoD MOU signed between the institution and the DoD for compliance.”

No one has been charged with any crime in connection with the investigation. Sources told Fox News that Assistant U.S. Attorney for the Eastern District of Virginia James P. Gilllis got the case, but there was a disagreement with the FBI over how to proceed, based on the case law and the extent to which sources and methods would be revealed.

Neither the FBI nor a spokesman for Gillis would comment to Fox News but separately, a spokesman for NCIS said they cannot comment on an “ongoing investigation.” A FOIA request filed by Fox News Senior Executive Producer Pamela Browne confirmed an NCIS investigative file for UMT.

Fox News made repeated requests by phone and via email for interviews with Yanping Chen and J. Davidson Frame. After Chen’s daughter said they were too busy to prepare and traveling out of town, Fox News went to their offices in Rosslyn, Va.

A school representative, who would not identify himself, confirmed Chen and Frame were in the office that day, but after learning Fox News was at the front desk, the couple refused to come out. Fox News’ questions covered how UMT was run, Chen’s suspected military ties, whether service members’ records are secure, and how millions in taxpayer dollars are spent.

Fox News also sent a series of questions to the Chinese embassy in Washington, D.C., but there was no immediate response.

According to UMT, nearly 20,000 students have studied there, while 10,710 have earned degrees.

 

 

 

 

Russia’s Hybrid Warfare, Here to Stay

Seems like everyday, Russia is in our house, in fact it is true. The hybrid warfare crafted by the Kremlin is here to stay so exactly when does the Trump White House deal with this constant threat? What threat you ask?

Adam Meyers is from the cyber-security firm CrowdStrike. As the Vice President of Intelligence, Adam heads a team that identifies the perpetrators of cyber-crimes, both in the private and public sectors. CrowdStrike helped to identify the hackers behind the Democratic National Committee’s email leaks last year, and more recently the mastermind behind the Kelihos Botnet.

*** Notice, there was no intrusion into Marie Le Pen’s campaign operations. Why? Putin endorses LePen and has provided campaign funds to her.

According to Trend Micro researchers, the campaign of French presidential candidate Emmanuel Macron has been hit by the same Russian hackers who targeted Democratic campaign officials in the U.S. before last year’s presidential election, the New York Times reports.

On March 15, the researchers say, they saw the Pawn Storm group (a.k.a. Fancy Bear, APT28 or the Sofacy Group) begin targeting Macron’s campaign with phishing attacks seeking campaign officials’ login information.

“The phishing pages we are talking about are very personalized Web pages to look like the real address,” Mounir Mahjoubi, Macron’s digital director, told the Times. “They were pixel perfect. It’s exactly the same page. That means there was talent behind it and time went into it — talent, money, experience, time and will.”

Still, Mahjoubi said none of the attacks was successful.

He described the phishing attacks as the invisible side of a Russian campaign against Macron, with the visible side being fake news published on Russian news sites like Sputnik and RT. More here.

***

Panel to Senate: Cyber Operations Influence Political Processes Worldwide

Russia used “useful idiots” to meddle in the U.S. presidential election and “fellow travelers” opposed to European Union and NATO to influence elections in France and Germany, while Islamic terrorists used “agent provocateurs” to topple Spain’s government in 2004 and cast another pall over French voting, a cyber security expert told a congressional subcommittee Thursday.

That, in capsule form, is how cyber is changing how the public views elections, Clint Watts, of the Foreign Policy Research Institute, said at the Senate Armed Services cybersecurity subcommittee hearing.

So far in the case of the United States warding off this kind of activity, “far more is said than done.” He added it is a “human challenge, not technical ones” that needs to be addressed.

In the American and European elections, he said at the panel’s first public hearing since being formed the Russians created content, sent it out as if were “nuclear-powered and “pushed [it] in unison from many locations,” including “gray outlets” that appear to be legitimate sources of news. They also did all of this over long periods of time.

The goal in the American election was to plant doubt in the integrity of the voting, he said. He added there was no indication that actual votes were tampered with.

Later in answer to a question, Watts said the Russians “are picking parties and supporting them” in the United States and financially in Europe.

In cyber, not all is as it appears and its speed is instantaneous.

Rand Waltzman, senior information scientist at the RAND Corporation, described how an American special forces raid that successfully rescued a hostage and killed a number of terrorists in Iraq was turned into a terrorist propaganda victory. “Those guys film everything,” he said describing how they recorded the incident by placing the bodies on prayer rugs so it appeared that soldiers killed innocent civilians. The video was posted before the special forces soldiers returned to their base. “How did they manage to this so fast?” Their mobile phones.

This changed the story of what happened 180 degrees and put the United States in the position of having to refute the video rather than telling a story of rescue.

He said this kind of quick reaction by adversaries — misinformation, fake news — requires new thinking on cyber security. Instead of the traditional “denial of service” by causing a crash, they are applying “cognitive denial of service” — misinformation and propaganda — to achieve their ends.

“We’re hamstrung” by bureaucracy and directives in addressing the new “hyperkinetic world,” Michael Lumpkin, former acting under secretary of defense for policy, said. The United States’ government efforts in public diplomacy, public affairs and information operations have not been synchronized so that it becomes a credible source of information. It also needs to take the necessary steps “to make sure our information is accurate” before releasing it. “That has not always been the case.”

John Inglis, former deputy director of the National Security Agency, used his organization’s handling of metadata collection as an example. “You need to go first” to establish credibility and explain the value of what it is you are doing. “We went second. That made it more difficult to put it back in the bottle.”

Watts said one approach would be to have a rating non-profit, private agency, similar to Consumer Reports, vet every story on Twitter, Facebook and Google. He added Facebook and Google “are moving in that direction” to eliminate false news, but so far Twitter has not acted.

When asked how he rated RT, the Russian-sponsored media outlet, as a source of news, he said 70 percent was true, 20 percent was misleading and 10 percent false. Watts said he rated some American media outlets as falling in the same percentages of true, misleading and false.

A continuing difficulty in improving cyber security in and out of government is “how do you get people to share problems,” Waltzman said when they would prefer not to admit being hacked or even attacked. Lumpkin said more also needs to be done in training people how not to “provide access to adversaries unwittingly” and holding them accountable for security.

As for recruiting skilled cyber workers, “they’re motivated people out there” interested in the challenges they can find in government, rather than private sector, careers, Watts said. “Give them the space to be the tech savants they are.”

*** Need more? Do you ever watch C-Span and listen to testimony before Congressional committees? No? Too bad, but here is some help:

Russian cyber enabled influence operations demonstrate never-before-seen synchronization of Active Measures.  Content created by white outlets (RT and Sputnik News) promoting the release of compromising material will magically generate manipulated truths and falsehoods from conspiratorial websites promoting Russian foreign policy positions, Kremlin preferred candidates or attacking Russian opponents.  Hackers, hecklers and honeypots rapidly extend these information campaigns amongst foreign audiences. As a comparison, the full spectrum synchronization, scale, repetition and speed of Russia’s cyber-enabled information operations far outperform the Islamic State’s recently successful terrorism propaganda campaigns or any other electoral campaign seen to date.

Cyber-enabled Influence Thrives When Paired with Physical Actors and Their Actions – 

American obsession with social media has overlooked the real world actors assisting Russian influence operations in cyber space, specifically “Useful Idiots,” “Fellow Travelers,” and “Agent Provocateurs.”

“Useful Idiots” – Meddling in the U.S. and now European elections has been accentuated by Russian cultivation and exploitation of “Useful Idiots” – a Soviet era term referring to unwitting American politicians, political groups and government representatives who further amplify Russian influence amongst Western populaces by utilizing Russian kompromat and resulting themes.

“Fellow Travelers” – In some cases, Russia has curried the favor of “Fellow Travelers” – a Soviet term referring to individuals ideologically sympathetic to Russia’s anti-EU, anti-NATO and anti-immigration ideology. A cast of alternative right characters across Europe and America now openly push Russia’s agenda both on-the-ground and online accelerating the spread of Russia’s cyber-enabled influence operations.

“Agent Provocateurs” – Ever more dangerous may be Russia’s renewed placement and use of “Agent Provocateurs” – Russian agents or manipulated political supporters who commit or entice others to commit illegal, surreptitious acts to discredit opponent political groups and power falsehoods in cyber space. Shots fired in a Washington, D.C. pizza parlor by an American who fell victim to a fake news campaign called #PizzaGate demonstrate the potential for cyber-enabled influence to result in real world consequences. While this campaign cannot be directly linked to Russia, the Kremlin currently has the capability to foment, amplify, and through covert social media accounts, encourage Americans to undertake actions either knowingly or unknowingly as Agent Provocateurs.

Each of these actors assists Russia’s online efforts to divide Western electorates across political, social, and ethnic lines while maintaining a degree of “plausible deniability” with regards to Kremlin interventions. In general, Russian influence operations targeting closer to Moscow and further from Washington, D.C. will utilize greater quantities and more advanced levels of human operatives to power cyber-influence operations. Russia’s Crimean campaign and their links to an attempted coup in Montenegro demonstrate the blend of real world and cyber influence they can utilize to win over target audiences. The physical station or promotion of gray media outlets and overt Russian supporters in Eastern Europe were essential to their influence of the U.S. Presidential election and sustaining “plausible deniability.”

It’s important to note that America is not immune to infiltration either, physically or virtually.  In addition to the Cold War history of Soviet agents recruiting Americans for Active Measures purposes, the recently released dossier gathered by ex MI6 agent Chris Steele alleges on page 8 that Russia used “Russian émigré & associated offensive cyber operatives in U.S.” during their recent campaign to influence the U.S. election. While still unverified, if true, the employment of such agents of influence in the U.S. would provide further plausible deniability and provocation capability for Russian cyber-enabled influence operations.

2) How can the U.S. government counter cyber-enabled influence operations?

When it comes to America countering cyber-enabled influence operations, when all is said and done, far more is said than done. When the U.S. has done something to date, at best, it has been ineffective. At worst, it has been counterproductive. Despite spending hundreds of millions of dollars since 9/11, U.S. influence operations have made little or no progress in countering al Qaeda, its spawn the Islamic State or any connected jihadist threat group radicalizing and recruiting via social media.

Policymakers and strategists should take note of this failure before rapidly plunging into an information battle with state sponsored cyber-enabled influence operations coupled with widespread hacking operations – a far more complex threat than any previous terrorist actor we’ve encountered.  Thus far, U.S. cyber influence has been excessively focused on bureaucracy and expensive technology tools – social media monitoring systems that have failed to detect the Arab Spring, the rise of ISIS, the Islamic State’s taking of Mosul, and most recently Russia’s influence of the U.S. election.  America will only succeed in countering Russian influence by turning its current approaches upside down, clearly determining what it seeks to achieve with its counter influence strategy and then harnessing top talent empowered rather than shackled by technology – a methodology prioritizing Task, Talent, Teamwork and Technology in that order.

Task – Witnessing the frightening possibility of Russian interference in the recent U.S. Presidential election, American policy makers have immediately called to counter Russian cyber influence.  But the U.S. should take pause in rushing into such efforts. The U.S. and Europe lack a firm understanding of what is currently taking place.  The U.S. should begin by clearly mapping out the purpose and scope of Russian cyber influence methods.  Second, American politicians, political organizations and government officials must reaffirm their commitment to fact over fiction by regaining the trust of their constituents through accurate communications. They must also end their use of Russian kompromat stolen from American citizens’ private communications as ammunition in political contests. Third, the U.S. must clearly articulate its policies with regards to the European Union, NATO, and immigration, which, at present, sometimes seems to mirror rather than counters that of the Kremlin. Only after these three actions have been completed, can the U.S. government undertake efforts to meet the challenge of Russian information warfare through its agencies as I detailed during my previous testimony.

Talent –Russia’s dominance in cyber-enabled influence operations arises not from their employment of sophisticated technology, but through the employment of top talent. Actual humans, not artificial intelligence, achieved Russia’s recent success in information warfare. Rather than developing cyber operatives internally, Russia leverages an asymmetric advantage by which they coopt, compromise or coerce components of Russia’s cyber criminal underground.  Russia deliberately brings select individuals into their ranks, such as those GRU [Russia’s foreign intelligence agency] leaders and proxies designated in the 29 December 2016 U.S. sanctions. Others in Russia with access to sophisticated malware, hacking techniques or botnets are compelled to act on behalf of the Kremlin.

The U.S. has top talent for cyber influence but will be unlikely and unable to leverage it against its adversaries.  The U.S. focuses on technologists failing to blend them with needed information campaign tacticians and threat analysts.  Even further, U.S. agency attempts to recruit cyber and influence operation personnel excessively focus on security clearances and rudimentary training thus screening out many top picks.  Those few that can pass these screening criteria are placed in restrictive information environments deep inside government buildings and limited to a narrow set of tools.  The end result is a lesser-qualified cyber-influence cadre with limited capability relying on outside contractors to read, collate and parse open source information from the Internet on their behalf.  The majority of the top talent needed for cyber-enabled influence resides in the private sector, has no need for a security clearance, has likely used a controlled substance during their lifetime and can probably work from home easier and more successfully than they could from a government building.

Teamwork – Russia’s cyber-enabled influence operations excel because they seamlessly integrate cyber operations, influence efforts, intelligence operatives and diplomats into a cohesive strategy.  Russia doesn’t obsess over their bureaucracy and employs competing and even overlapping efforts at times to win their objectives.

Meanwhile, U.S. government counter influence efforts have fallen into the repeated trap of pursuing bureaucratic whole-of-government approaches. Whether it is terror groups or nation states, these approaches assign tangential tasks to competing bureaucratic entities focused on their primary mission more than countering cyber influence.  Whole-of-government approaches to countering cyber influence will assign no responsible entity with the authority and needed resources to tackle our country’s cyber adversaries.  Moving forward, a task force led by a single entity must be created to counter the rise of Russian cyber-enabled operations.

Technology – Over more than a decade, I’ve repeatedly observed the U.S. buying technology tools in the cyber- influence space for problems they don’t fully understand. These tech tool purchases have excessively focused on social media analytical packages producing an incomprehensible array of charts depicting connected dots with different colored lines. Many of these technology products represent nothing more than modern snake oil for the digital age.  They may work well for Internet marketing but routinely muddy the waters for understanding cyber influence and the bad actors hiding amongst social media storm.

Detecting cyber influence operations requires the identification of specific needles, amongst stacks of needles hidden in massive haystacks. These needles are cyber hackers and influencers seeking to hide their hand in the social media universe. Based on my experience, the most successful technology for identifying cyber and influence actors comes from talented analysts that first comprehensively identify threat actor intentions and techniques and then build automated applications specifically tailored to detect these actors.  The U.S. government should not buy technical tools nor seek to build expensive, enterprise-wide solutions for cyber-influence analytics that rapidly become outdated and obsolete.  Instead, top talent should be allowed to nimbly purchase or rent the latest and best tools on the market for whatever current or emerging social media platforms or hacker malware kits arise.

3. What can the public and private sector do to counter influence operations?

I’ve already outlined my recommendations for U.S. government actions to thwart Russia’s Active Measures online in my previous testimony on 30 March 2017. Social media companies and mainstream media outlets must restore the integrity of information by reaffirming the purity of their systems. In the roughly one month since I last testified however, the private sector has made significant advances in this regard. Facebook has led the way, continuing their efforts to reduce fake news distribution and removing up to 30,000 false accounts from its system just this past week. Google has added a fact checking function to their search engine for news stories and further refined its search algorithm to sideline false and misleading information. Wikipedia launched a crowd-funded effort to fight fake news this week.  The key remaining private sector participant is Twitter, as their platform remains an critical networking and dissemination vector for cyber-enabled influence operations.  Their participation in fighting fake news and nefarious cyber influence will be essential. I hope they will follow the efforts of other social media platforms as their identification and elimination of fake news spreading bots and false accounts may provide a critical block to Russian manipulation and influence of the upcoming French and German elections.

In conclusion, my colleagues and I identified, tracked and traced the rise of Russian influence operations on social media with home computers and some credit cards. While cyber-influence operations may appear highly technical in execution, they are very human in design and implementation.  Technology and money will not be the challenge for America in countering Russia’s online Active Measures; it will be humans and the bureaucracies America has created that prevent our country from employing its most talented cyber savants against the greatest enemies to our democracy. Full article here.

DHS’s Office for Community Partnerships, Stonewalling

Release Date:
September 28, 2015  <– Note Jeh Johnson created this department

DHS: Violent extremism – that which is inspired by foreign terrorist groups and that which is rooted in a range of domestic-based radical ideologies – pose a persistent and unpredictable threat to our homeland. Countering violent extremism has become a key focus of DHS’s work to secure the homeland. Last year I appointed a Department-wide coordinator for our efforts to counter violent extremism. As Secretary of Homeland Security, I am also personally committed to this mission, having traveled to Boston, Chicago, Columbus, Houston, Los Angeles, Minneapolis, New York City, northern Virginia and suburban Maryland to meet with community leaders as part of this effort. We heard many strongly-held views, generated conversations, and built some bridges.

It is now time to take our efforts to the next level.

Today I announce the creation of the DHS Office for Community Partnerships. This Office will be dedicated to the mission of countering violent extremism, but its ultimate mission is as its name suggests – community partnerships. My charge to this Office, to be set forth in a more detailed plan, is to continue to build relationships and promote trust, and, in addition, find innovative ways to support communities that seek to discourage violent extremism and undercut terrorist narratives. More here.

Problem? Either DHS was told to hide documents, not cooperate, there is collusion or the Obama White House applied executive privilege to the documents.

Just before Jeh Johnson left as Secretary of DHS:

For Immediate Release
Office of the Press Secretary
Contact: 202-282-8010

In 2016, Congress answered our call for federal grants, awarded and administered by the Department of Homeland Security, to support local efforts to counter violent extremism. Today, I am pleased to announce the first round of awards of these grants.

A total of 31 proposals, from various organizations in multiple communities, have been accepted to receive some part of the $10 million appropriated by Congress last year. The funding will go for activities that include intervention, developing resilience, challenging the narrative, and building capacity. The organizations approved for grants include local governments, universities, and non-profit organizations, in locations across the country such as Boston, Minneapolis, Los Angeles, Detroit, Nebraska, Houston, Illinois, New Jersey, Texas and New York City. Among the awardees are organizations devoted specifically to countering ISIL’s recruitment efforts in our homeland, and Life After Hate, an organization devoted to the rehabilitation of former neo-Nazis and other domestic extremists in this country. More here.

The lawsuit is found here.

Background:

Philadelphia – May 1, 2017 – The Middle East Forum has filed a lawsuit against the Department of Homeland Security (DHS) to secure the release of documents related to the Obama administration’s Countering Violent Extremism (CVE) grant program.

The grant program, which began last year, is intended to assist “efforts at the community level to counter violent extremist recruitment and radicalization to violence,” but MEF was concerned about U.S. Islamist groups – themselves radicals – receiving CVE funds. Indeed, grant recipients have included the Muslim Public Affairs Council (MPAC), an organization with ties to the Muslim Brotherhood and a long history of sanitizing Islamist terrorism.

On January 10, MEF filed a detailed Freedom of Information Act (FOIA) request with DHS seeking documents about the selection criteria and specific decisions in awarding CVE grants. The request indicated that the documents are mostly located at the DHS Office for Community Partnerships (OCP), headed by George Selim.

Having failed to receive even a response to its request within the 20-day period mandated by law, MEF contacted DHS. Finally, on March 23, DHS FOIA officer Ebony Livingston informed us that the request had been routed to the Federal Emergency Management System (FEMA), which found no pertinent records.

On April 26, MEF filed a lawsuit alleging that DHS violated the law by not only failing to produce the documents, but failing even to conduct a search for the documents.

The complaint, prepared by attorney Matt Hardin, a specialist in FOIA litigation, seeks injunctive relief compelling DHS “to search for and produce all records in its possession responsive to plaintiff’s FOIA request.”

“We filed a detailed FOIA request, specifying the documents we were looking for and where they likely were,” said MEF Director Gregg Roman. “DHS not only failed to produce the documents, it failed even to conduct a search and closed our case without bothering to tell us. This is not just unacceptable but illegal.”

The case has been assigned to Judge Royce C. Lamberth of the United States District Court for the District of Columbia. It bears noting that Judge Lamberth previously handled FOIA litigation concerning former Secretary of State Hillary Clinton’s emails.

“The CVE program should be canceled altogether,” said Sam Westrop, director of MEF’s Islamist Watch project. “And guidelines should be put in place to make sure that extremist groups like MPAC never receive taxpayer money to counter extremism.”