Why I Wrote This Story

  by Catherine Austin Fitts I made the decision to write “Dillon, Read & Co. Inc. and the Aristocracy of Stock Profits” in the middle of a vegetable garden in Montana during the summer of 2005. I had come to Montana to develop a venture capital model to support a healthier, fresher local food supply….

I. Brady, Bush, Bechtel & “the Boys” [1]

I remember when John Birkelund first came to Dillon Read in 1981 to serve as President and Chief Operating Officer.2 Dillon was a small private investment bank on Wall Street with a proud history and a shrinking market share as technology and globalization fueled new growth. I had joined the firm three years before and,…

II. A Rothschild Man

John Birkelund arrived at Dillon Read in September 1981. Born in Glencoe, Illinois, he had graduated from Princeton and then had joined the Navy where he served with the Office of Naval Intelligence in Berlin. While in Europe he became friends with Edward Stinnes, who recruited him after a short career with Booz Allen in…

III. RJR Nabisco

If you want to understand Dillon Read in the 1980s, you must understand R.J. Reynolds (RJR), a tobacco company based in Winston-Salem, North Carolina. According to the official Dillon history, The Life and Times of Dillon Read by Robert Sobel (Truman Talley Books/Dutton, 1991) at pages 345-346, RJR had been Dillon client for many years:…

IV. Narco Dollars in the 1980s: Mena, Arkansas; South Central L.A.

During the 1980s, a sometime government agent named Barry Seal led a smuggling operation that delivered a significant amount of narcotics estimated to be as much as $5 billion from Latin America through an airport in Mena, Arkansas.[16] According to investigative reporters and researchers knowledgeable about Mena, the operation had protection from the highest levels…

V. Leveraged Buyouts

Leveraged buyouts were a phenomenon that got going in the 1980s. A leveraged buyout (LBO) is a transaction in which a financial sponsor buys a company primarily with debt — effectively buying the target company with the target’s own cash and financial ability to service the debt. As described in Barbarians at the Gate: The…

VI. A Parting of the Ways

There was an invisible spirit that crept through our lives on Wall Street in the 1980s. LBO’s were a part of it. I could never quite put my finger on what was wrong. It was as if there was too much dirty money and, as it grew more and more powerful in invisible ways, the…

VII. “HUD is a Sewer”

As Assistant Secretary for Housing-Federal Housing Commissioner, I was responsible for the operations of the Federal Housing Administration (FHA), which was the largest mortgage insurance fund in the world. FHA at that time had annual originations of $50-100 billion of mortgage insurance and an outstanding portfolio of $320 billion of mortgage insurance, mortgages and properties….

VIII. Dillon’s Investment in Cornell

On February 21, 1991, after I had left the Bush Administration and remained in Washington D.C. to invest in my own start up, Hamilton Securities, Dillon Read’s Venture group invested in Cornell Corrections — essentially bankrolling the creation of quite a different startup in the newly emerging private prison industry. Cornell was founded with David…

IX. Cornell Corrections

Based on company SEC filings, Houston-based Cornell Corrections started off with correctional facilities in Massachusetts and Rhode Island in 1991 and then in 1994 acquired Eclectic Communications, the operator of 11 pre-release facilities in California with an aggregate design capacity of 979 beds. An important relationship for Cornell from the start was the U.S. Marshals…

X. The Clinton Administration: Progressives for For-Profit Prisons

Much has been written about the use of the War on Drugs to intentionally disenfranchise poor people and engineer the centralization of political and economic power in the U.S. and globally, including an explosive rise in the U.S. prison population. The purpose of this story is not to repeat this fundamentally sound thesis. For those…

XI. Hamilton Securities Group

I left the Bush Administration in 1990, persuaded that digital technology and the Internet could be used by entrepreneurs to create new wealth in an investment model that created alignment between global investors and the land, environment and people. If we financed places with equity instead of debt, we could create a way for global…

XII. A Note on Protecting the Brand with Dirty Tricks

The process and technology of compromising and controlling honest business and government leaders and journalists — or destroying them when they can not be controlled — are closely guarded secrets known mostly to those who inhabit the covert world or, such as myself, are privileged to have survived their initiation and real world training program….

XIII. “You are Going to Prison” — 1996

Though a fictional movie, Enemy of the State with Will Smith and Gene Hackman shows how targeting a person works in Washington, D.C. Will Smith plays a Washington lawyer who is targeted in a phony frame-and-smear campaign by U.S. intelligence agency personnel who are afraid that he has evidence of their assassination of a Congressman….

XIV. Enforcement Terrorism — 1997

By the time Bill Clinton and Al Gore were sworn in for their second term in January 1997, the first wave of investigation and smear campaign had failed to do anything other than affirm that The Hamilton Securities Group was doing a great job for the government and the government team at FHA was doing…

XV. Dillon Read — Cashing Out on Cornell

When Cornell Corrections listed its shareholders with investments of greater than 5% in its proxy statement filed with the SEC in March 1998, Dillon Read was no longer listed. Making the assumption that Dillon Read and its various funds and officers and directors cashed out at or between the second Cornell offering in October 1997…

XVI. Financial Coup d’Etat — 1998

Photo: Richard Grasso (chairman and chief executive of the New York Stock Exchange from 1995 to 2003) hugging a FARC Commander in 1999 in a rebel village in Colombia. At this time, the GAO reported that FARC had assumed control of a majority market share of the Colombian cocaine trade. (Photo courtesy LaRouche Campaign) The…

XVII. Private Banking & the Profitable Liquidation of Every Place

In December of 1998, during the period when Dillon Read cashed out of Cornell Corrections and $59 billion went missing from HUD, Time Magazine published an article, “Just Hide Me the Money” by S.C. Gwynne with reporting by Adam Zagorin about the October 1998 Citicorp and Travelers merger and the world of offshore banking: “Citibank’s…

XVIII. Through the Via Dolorosa

The Via Dolorosa is the street in the Old City of Jerusalem which Jesus is said to have walked on the way to his crucifixion. It means “the way of grief.” I believe if Dillon’s Chairman John Birkelund and I were free to speak openly about his investment in Cornell Corrections, he would say that…