Category: Spin Doctors

Lanny Davis and Metabolife

My Rolling Stone piece on Michael Cohen’s attorney Lanny Davis, who also represents a high-level Russian Mafia associate, is up. You can read it here.

[Apologies for repeating this post a second time, but after I posted an earlier draft, I realized, as I often do, that this might be something worth publishing.]

I’ve been aware of Davis for a long time, ever since his days representing a sleazy San Diego firm called Metabolife.

Metabolife was founded in 1995 by a man named Michael Ellis, an ex-cop who had a felony record for a meth lab bust in the San Diego suburb of Rancho Santa Fe. While on probation, Ellis had a brilliant idea. He realized that, thanks to a loophole in the law, he could sell speed legally. Thus was born Metabolife.

Metabolife’s pills contained ephedra, the herbal form of the stimulant ephedrine, which is a key ingredient in methamphetamine. It was legal to sell ephedra at the time,  thanks to a law sponsored by Senator Orrin Hatch, the Utah Republican, who dabbled in the vitamin business as a young man.

Hatch’s law deregulated the dietary supplements industry. Dietary supplement makers no longer had to show their products were safe. Under the law, Metabolife had no duty to report even the deaths of its customers.

Sales took off. Revenues at privately-held Metabolife had soared to more than $360 million in four years, but the company had a problem: People who gobbled its pills sometimes wound up in the hospital — or worse. One user’s heart rate zoomed to 300 beats a minute. Some turned into psychotic speed freaks. A Government Accounting Office report found Metabolife’s pills caused 18 heart attacks, 26 strokes, 43 seizures and five deaths.

When Congress started to investigate whether Ellis“put sales above safety,”  Metabolife hired Lanny Davis, who was then with the DC powerhouse firm of Patton Boggs. (Interestingly, Cohen worked for the same firm, now known as Squire Patton Boggs, after Trump’s election.)

I wrote a story for The Associated Press in 2004 pointing all this out:

“Patton Boggs earned millions helping project reassurances to Congress and its customers that Metabolife products were safe,” I wrote. “In mid 2002, Patton Boggs lobbyist Lanny Davis wrote a senator whose subcommittee was investigating Metabolife that the company had received only 78 ‘unproven, anecdotal allegations’ of strokes, heart attacks, seizures and deaths.”

Prosecutors alleged company founder Michael Ellis lied about Metabolife’s safety record in a 1998 letter to the U.S. Food and Drug Administration, which Patton Boggs attorneys helped him draft. (One former and four current Patton Boggs attorneys were subpoenaed by a federal grand jury in San Diego. A judge ruled they had to testify.)

Here’s a snippet of the FDA letter:

Screen Shot 2018-08-23 at 5.18.49 PM

That wasn’t true. The FDA finally banned sales of ephedra in 2004, saying it was linked to 155 deaths, including 23-year-old Baltimore Orioles pitcher Steve Bechler. Ellis was eventually convicted of lying to the FDA; Metabolife pleaded guilty to tax evasion.

The conclusion is this: Davis and Patton Boggs helped Metabolife as it covered up a health crisis. Before I get a nasty letter from Mr. Davis, let me say that there’s no evidence that he did anything wrong or acted unprofessionally. But credibility matters, and after years of representing shady clients, Davis’ may find his credibility in short supply when he needs it most.

Obama and GCHQ tale is Russian disinformation

Note: This piece has been updated.

It anyone surprised that the allegation that President Obama used Britain’s GCHQ intelligence agency to eavesdrop on Donald Trump was first broadcast on RT, the Kremlin’s international propaganda outlet?

This allegation has gone in a few days from being a crackpot theory on social media to an international dispute. Britain was furious when White House spokesman Sean Spicer cited the GHCQ story as part of his defense of Trump’s claim that he was “wire tapped” by President Obama. The GHCQ, Britain’s version of the National Security Agency, issued a rare denial.

That this GHCQ allegation was first given life by RT shows the influence of the Kremlin-backed network, which has found a sympathetic ear in the White House. According to the U.S. intelligence community that Trump so openly distrusts, RT has the goal of undermining its viewers’ trust in US democratic procedures.

On March 5, the day after Trump tweeted that “Obama had my ‘wires tapped’ in Trump Tower,” RT broadcast an interview with Larry C. Johnson, once an analyst with the CIA.

In the clip, linked above, Johnson said “very good friends” had told him that information  gathered by GHCQ on Donald Trump was illegally disseminated within the US government in an effort to destroy his candidacy.  Obama, Johnson said, “gave the green light” to distribute the information from GHCQ in an improper way.

On his blog, Johnson goes into more detail about his sourcing. (Update: Johnson’s blog was taken off line shortly after this piece was published).

No one involved with the Trump campaign reached out to me and asked me to get involved with this. I spoke three months ago with a source that, if the source’s name was revealed, would be known and recognized as a reliable source of information. Based on that contact I reached out to friends in the intel community and asked them about the possibility that a back channel was used to get the Brits to collect on Trump associates. My sources said, “absolutely.” I later confirmed this via a cut out with a person who is a Senior Intelligence Service executive in the CIA.

Assuming that’s true, why would Johnson, a former CIA analyst, would go on a Russian propaganda network that presents anti-American views?  CNN’s Brian Stelter put that question to Johnson on his show, Reliable Sources.

STELTER: Why is it appropriate for any American to appear on a Kremlin propaganda network?

JOHNSON: Well, it’s not a Kremlin propaganda network. … What I found the difference with Russia Today is they don’t do pre-interviews. I’ve done pre-interviews with your people. I’ve done pre-interviews in the past when I appeared on other networks.

Just two days ago, I did a pre-interview with BBC. They were going to have me on air. But once they heard what I had to say, they came back and said, oh, no, we don’t need to use you now. So, I’m —

Johnson’s point is that RT doesn’t censor its guests. Stelter’s point, which he presses later in the interview, is that anyone can go on RT and say whatever they want without bothering about details like sourcing and verification.

Johnson theories about GHCQ are likely to prove false: officials in Britain and Washington have called it ridiculous.  For RT’s purposes it doesn’t matter whether Johnson is telling the truth, only that his information serves its broader goals.

RT’s GHCQ story is the textbook definition of disinformation:

false information deliberately and often covertly spread (as by the planting of rumors) in order to influence public opinion or obscure the truth.

So back on March 5, while former Director of National Intelligence James Clapper was knocking down Trump’s claims on Meet the Press, RT was quickly building a counter-narrative that besmirched the United States with Johnson’s help.

An outfit like Meet the Press needs a big audience to deliver ad dollars; since it strives to be objective, it has to present credible sources. That means it has guests like Clapper who as insiders know whether Obama really “wire tapped” Trump or not.  If Meet the Press had people like Larry Johnson or RT’s Illuminati correspondent sitting around talking about what their friends supposedly told them, the audience would find something better to do and the ad dollars would dry up pretty quickly.

RT, on the other hand, is funded by the Russian government. It doesn’t need a big audience. So it can quickly disseminate poorly sourced, unverified information that drives home the message that Russia is not the bad guy and America isn’t so great, anyway.

Johnson sought to minimize his role in the GHCQ affair by telling Stelter that nobody watched RT.

STELTER: You’re saying Russia today is not that influential?

JOHNSON: I’m telling you that’s the truth. I mean, who watches it?  The fact that I spoke about it two weeks ago and it didn’t even surface — it wasn’t even a blip anywhere in the U.S. news media. And so, I guarantee, if people like yourself who were very informed, very up to speed on things, don’t pick up on something like that, you expect a coal miner in Pennsylvania, an auto worker in Michigan, that they’re going to be on top of Russia Today?

But information warfare, as Johnson surely knows, doesn’t need a big audience to work.

It has just to plant a false idea that contradicts the conventional narrative. Johnson made a big fuss about how it took so long for his story to spread, but that’s how rumors work. And that’s what makes them so effective. They are spread person-to-person by social media and word-of-mouth  until they reach a critical mass. If you wanted to drive a wedge between allies, there’s no way to do it better. It’s cheap, bloodless, and stunningly effective.

Johnson’s unsupported allegation was rebroadcast on right-wing Internet on blogs and websites until March 14 when it jumped into mainstream media. Fox contributor Andrew Napolitano repeated the allegation on the talk show “Outnumbered” and then repeated it again on Fox News. Johnson told The New York Times he was one of Napolitano’s sources.

On Friday, Trump refused to back down from the allegation, telling reporters, “All we did was quote a very talented legal mind.”

Did the president realize he was also quoting Johnson via Russian media?

Johnson, who is almost always referred to as a former CIA analyst, worked for the spy agency in the 1980s. After four years in the State Department’s Office of Counterterrorism, Johnson left government service in 1993.

Since then, he gotten embroiled in controversy such as his claim that Republican operatives possessed a tape of Michelle Obama railing against “whitey.” (Johnson claims he was manipulated by Clinton confidant Sidney Blumenthal.) Or that Bush White House advisor Karl Rove had been indicted.

Johnson has been a member of Veteran Intelligence Professionals for Sanity (VIPS), a group of intelligence professionals formed in 2003 to protest the use of faulty intelligence that was used as a grounds for the invasion of Iraq.

VIPS and Johnson have been critical of the US intelligence community’s findings that Russia hacked the U.S. election. On Dec. 15, Johnson co-signed a VIPS letter that stated the hacking allegations “have no basis in fact” and suggested an “inside leak,” not hacking, was behind the release of DNC emails. Not surprisingly, RT publicized the letter.

It’s worth noting here that Ray McGovern, a former CIA analyst and founding member of Veteran Intelligence Professionals for Sanity attended the now infamous 2015 RT 10th anniversary dinner in Moscow, where he sat at the same head table with President Vladimir Putin and former Gen. Michael Flynn. (link) It seems McGovern makes an annual pilgrimage to Moscow where we find him pontificating in RT’s studios.

Napolitano for his part has also peddled Kremlin disinformation before. On May 6, 2016, he reported that “there’s a debate going on in the Kremlin between the Foreign Ministry and the Intelligence Services about whether or not they should release the twenty thousand of Mrs. Clinton’s emails that they have hacked into and received and stored.” (archived link)

Now, mind you, this was days before hacked emails from the Clinton campaign began appearing on the Internet.

According to Malcolm Nance’s informative book, The Plot to Hack America, Napolitano’s source this go-around appeared to be a conspiracy website called Whatdoesitmean.com.

It appears that the source of the story emanated from a mythical figure, a journalist named Sorcha Faal. Sorcha Faal is widely believed to be a pseudonym for David Booth. Booth hosts a wild-eyed conspiracy theory website called Whatdoesitmean.com. Usually websites like this and the more popular and crazier Infowars.com are easily dismissed as tinfoil hat crowds who see government conspiracy everywhere. Yet in this case “Sorcha Faal” appears to be so well wired into the Kremlin that “her” work at this website was often copied by mainstream Russian information propaganda like Russia Insider’s Svobodnaya Pressa (“ Free Press”). This site pushes wild conspiracy theories such as the proposition that the US trains and directs ISIS, and writes op-eds about the dangers of European multiculturalism. It is a core component of the Russian propaganda system, and such news organs as Ren TV (a large, private, pro-Putin Russian television channel) and Sputnik News (a multinational propaganda organ of the Russian government)

We might as well learn the Russian word for this, folks.

Dezinformatsiya.

The Ben Stein-Ray Lucia Mutual Admiration Society

Actor and corporate pitchman Ben Stein charges more than $50,000 for a single speech, according to his page at the Keppler Speakers Bureau.

If that’s the case, I would love to know how much he charges Ray “Buckets of Money” Lucia for making numerous appearances each year at Lucia’s free seminars and lauding him in The New York Times as a “guru.”

Let’s face it: it’s Stein, not Lucia, who is the big draw at the seminars. Stein has made a career out of being a bow-tied smartypants ever since he famously played a dull economics teacher in the movie Ferris Bueller’s Day Off. He even sued over his signature look in this lawsuit in which he describes himself as “the most famous economics teacher in the world.” In the public’s mind, Ben Stein is what an economist looks like.

The public doesn’t know or care that Stein is a securities lawyer by trade whose credentials as an economist amount to a famous economist for a father and a bachelor’s degree in economics. Never mind that to the folks I know in the finance world think Lucia and his buckets are a joke. Never mind that anyone at Goldman Sachs who starts blabbing about buckets of money will be shot at dawn.

I doubt that Stein truly believes that the “genius” of Ray Lucia is his bucket strategy. His genius such as it is lies in his salesmanship. Lucia understands that regular people don’t want to read financial reports and SEC filings. They want to see a man who plays an economist on TV. They want to hear jokes get some free advice about what to do with their retirement nest eggs. They want a show.

So they come for a show and they leave with a new money manager, Lucia’s son, Ray Jr. It will take a while before these unsuspecting investors realize that Lucia Jr. has drilled holes in their buckets with his company’s high fees and questionable investments such as non-tradeable REITs that earn Lucia huge commissions.

Stein provides his pal Lucia an additional, equally valuable service — repeatedly dropping Lucia’s name in his business columns in The New York Times and elsewhere. Stein’s shilling got him canned from the Times, so now he name drops Lucia in his American Spectator diary.

Stein will say almost anything if you pay him. He served as an expert witness for lawyers at Milberg Weiss until the firm went down under federal indictment for bribery and fraud. He has pitched Comcast, eye drops, cars, office equipment. So it’s no surprise that Stein praises Lucia as a “guru” or a “genius” in the same breath as Warren Buffet.

But this is a particularly insidious form of advertising. If you repeat something enough times, goes the old saw, it becomes truth. Especially when you can repeat it in The New York Times.

I happened to be sitting at Morton’s restaurant in Beverly Hills a few days ago with Mr. [Phil] DeMuth and with another financial adviser for whom I have high esteem, Raymond J. Lucia (for whom – full disclosure – I am about to give a speech or two urging people to save for retirement).

Ray and Phil said something like this to me: “You know there are not a lot of shows on TV that actually teach the viewer how to be a better investor. There is a lot of stock picking and predicting what can’t be predicted, but there is not a lot that tells the ordinary Joe or Jane how to save for retirement.”

Ray and Phil were right. And they will keep being right.
~ The New York Times, Feb. 27, 2005

I was recently on a panel with the stock guru Ray Lucia, who offered overwhelming data about how impossible it was to pick stocks, trade in and out of them and fare as well as the market. His data was terrifying.
~ The New York Times, Oct. 14, 2007

I checked with my investment gurus, Phil DeMuth, Raymond J. Lucia and Kevin Hanley. None of us could see how Mr. Madoff could do what his friends said he could do.
~ The New York Times, Dec. 26, 2008

I am to give a speech at a huge gathering hosted by my pal Ray Lucia. It is about investing. He has an immense crowd of well over 1,000 people today and my job is not really to sell them anything, but to give them a general overview of the economy.
~The American Spectator, May 2010.

Now, to pack and prepare to go see my pal Ray Lucia. Ray is simply the best wealth manager I know of. He knows more about personal finance than any other person I have ever met. His advice — lots of liquidity and very wide diversification — is so sensible it has saved me from suicide many a night. This guy is a lifesaver where managing money is concerned. We are colleagues, so I am not disinterested, but even before we were colleagues, I was learning from him and being guided by him.
~The American Spectator, June 1, 2010.

I have done the best I can, with the help of some true geniuses of finance like Phil DeMuth, Chris DeMuth, Ray Lucia, Anil Vazirani, J.W. Roth and, supreme above all of them, John Bogle and Warren Buffett, to invest wisely.
~The American Spectator, Aug. 12, 2011

If you don't care about your Facebook privacy then carry on


Update: “Mr Zuckerberg’s latest mea culpa is unlikely to be his last,” The Economist

Facebook settled with the Federal Trade Commission today, admitting that its repeated assurances to its 500 million users that it would puyour private information in a secure little box were lies. Mark Zuckerberg calls them “mistakes.”

I’m posting this because this news might well be overshadowed by a well-timed leak to The Wall Street Journal that Facebook is hoping for a $100 billion initial public offering later this year.

The FTC complaint lists a number of instances in which Facebook allegedly made promises that it did not keep:

  • In December 2009, Facebook changed its website so certain information that users may have designated as private – such as their Friends List – was made public. They didn’t warn users that this change was coming, or get their approval in advance.
  • Facebook represented that third-party apps that users’ installed would have access only to user information that they needed to operate. In fact, the apps could access nearly all of users’ personal data – data the apps didn’t need.
  • Facebook told users they could restrict sharing of data to limited audiences – for example with “Friends Only.” In fact, selecting “Friends Only” did not prevent their information from being shared with third-party applications their friends used.
  • Facebook had a “Verified Apps” program & claimed it certified the security of participating apps. It didn’t.
  • Facebook promised users that it would not share their personal information with advertisers. It did.
  • Facebook claimed that when users deactivated or deleted their accounts, their photos and videos would be inaccessible. But Facebook allowed access to the content, even after users had deactivated or deleted their accounts.
  • Facebook claimed that it complied with the U.S.- EU Safe Harbor Framework that governs data transfer between the U.S. and the European Union. It didn’t.

Carry on!

 

Anwar al-Awlaki's Death

The US is announcing the death of Anwar al-Awlaki, a U.S. citizen who moved to Yemen where he waged jihad against his former homeland. Assuming this is true — and not a repeat of what happened in 2009 when Awlaki was falsely reported as dead — it’s a major blow against one of al Qaida’s superstars.

What made Awlaki so dangerous wasn’t his so-called operational abilities, as the U.S. is now claiming, although no one is actually bothering to ask what that means. Awlaki was an intellectual, not a fighter. What made Awlaki so dangerous was his somewhat unique ability to inspire disaffected Muslims in the West to take up arms in the cause of jihad.

Awlaki may have rejected the West, but he knew how it worked. He spent many years here in San Diego and spoke both Arabic and English beautifully. Recordings of his sermons are very popular. He also knew how to use the Internet to reach people. I don’t think it’s a coincidence that U.S. counterterrorism officials started linking him to terrorism in the very same month that Awlaki started his now-defunct jihadist website.

What I always found fascinating about this so-called holy man got busted for prostitution twice in San Diego and was picked up by San Diego police for “hanging around a school.”  Maybe that’s why he needed his martyrdom, so he could wash his sins away. (I’ve written about him before here.  I also put together a comprehensive timeline.)

I won’t be shedding any tears for a man who plotted to kill Americans and praised the Fort Hood shooter Nidal Hasan as a “hero.” But Awlaki wasn’t Osama bin Laden. He wasn’t an Iraqi insurgent or a Taliban trying to kill U.S. troops. Awlaki a U.S. citizen.

He knew his death would point out the hypocrisy of a country with a constitution that guarantees its citizens due process of law and then goes out and assassinates them in Yemen with a drone strike. He knew we would succumb to our fears.

Like it or not, he was one of our own.