Lennart Hultman-Boye, a reporter with Sweden’s largest nightly news show at TV4, contacted me about a post I’d written years ago about the strange case of Mohdar Abdullah.
Abdullah, the former San Diego man who befriended two 9/11 hijackers, now lives in Sweden. He was called as a witness there in an ongoing lawsuit filed by families of 9/11 victims against Saudi Arabia.
Abdullah has so far avoided Swedish police trying to serve him with a legal demand to testify. He did not show up for a hearing two weeks ago.
You see Hultman-Boye’s report here (in Swedish).
Abdullah has admitted helping Nawaf al-Hazmi and Khalid al-Midhar — two al-Qaida operatives who lived in San Diego in 2000. Abdullah helped the two Saudis obtain state identification, contacting flight schools on their behalf and translating for them. Abdullah knew the pair had extremist leanings and sympathized with them, according to the 9/11 Commission’s final report. After Hazmi left San Diego, Abdullah remained in contact with him.
The question that has frustrated investigators is whether Abdullah knew in advance of the 9/11 attacks.
On the morning of Sept. 10 at the Texaco station where Abdullah worked, an FBI source reporting hearing Abdullah saying something like, “It’s finally going to happen.” That night, Abdullah married a young woman he had met a few months earlier, according to FBI Special Agent Daniel Gonzales.
Ten days after the 9/11 attacks, Abdullah was arrested as a material witness. Prosecutors considered charging him along with Zacarias Moussaoui, who is serving life in prison for conspiring to kill Americans in the 9/11 attacks, but ultimately decided not to.
While he was being held in jail, Abdullah allegedly bragged to fellow inmates that he had advance knowledge of the attacks, but authorities couldn’t substantiate the reports.
Abdullah was subsequently convicted of visa fraud and deported to his native Yemen.
He denied knowing about the attacks in advance.
Also of interest was how Abdullah crossed paths with two men with close ties to the Saudi government who lawyers for the 9/11 families want to talk to. Saudi Arabia has repeatedly denied any connection to the 9/11 hijackers.
The person who gave Abdullah the job of taking care of Hazmi and Midhar in San Diego was a mysterious Saudi-linked figure named Omar al-Baymoumi. Al-Bayoumi helped the al-Qaida operatives find an apartment in San Diego and co-signed the lease. He may even have paid their first month’s rent and security deposit. After the two future hijackers moved in, al-Bayoumi threw a party to welcome them to San Diego.
A 28-page section of the 9/11 Commission’s report that was declassified in 2016 quotes testimony from a former San Diego FBI agent. According to the agent, al-Bayoumi “acted like a Saudi intelligence officer, in my opinion. And if he was involved with the hijackers, which it looks like he was, if he signed leases, if he provided some sort of financing or payment of some sort, then I would say that there’s a clear possibility that there might be a connection between Saudi intelligence and UBL [Osama bin Laden].”
Last year, ProPublica and The New York Times reported that Gonzales had reinterviewed Abdullah in October 2006.
Abdullah told agents about a car trip he took to Los Angeles in June 2000 to drop Mihdhar at the airport before he flew back to Yemen to see his wife and daughter.
They went to the King Fahad Mosque in Culver City, California for the evening prayer and met an imam — Fahad al-Thumairy — who also met privately that evening with the hijackers.
Thumairy reportedly led an extremist faction at the mosque, which had been built with funding providing provided by the former Saudi Crown Prince, Abdulaziz, according to the 9/11 Report.
“Thumairy was the primary point of contact for Hazmi and Mihdhar in Los Angeles,” Steven Moore, a former assistant special agent in charge in Los Angeles in a statement given in support of the 9/11 families in their lawsuit. “Thumairy was aware in advance of their arrival and, through the King Fahad Mosque, had already provided a place for them to stay in Los Angeles.”
In a 2012 FBI report, agents noted that there was evidence that Thumairy and al-Baymoumi had been tasked with helping the hijackers by a third man — Mussaed Ahmed al-Jarrah, a mid-level Saudi Foreign Ministry official who was assigned to the Saudi Embassy in Washington, D.C., in 1999 and 2000. Yahoo News reported that FBI agents were unable to provde at al-Jarrah knew Hazmi and Midhar were members of al-Qaida.
Along Interstate 5 in San Diego just south of the airport, lies a hulking building with blacked out windows and a roof that looks like a long silver saw blade. The site of a former B-24 factory during World War II, this giant piece of corrugated metal is the home of the Space and Naval Warfare Systems Command or SPAWAR.
I’ve long been interested in SPAWAR (pronounced spā-wôr) mostly because exactly what it does is a bit of a mystery. Its mission is “enabling information warfare superiority” for our Naval and military forces. Operating with a $2.5 billion budget, SPAWAR employs more than 2,000 scientists, specializing in areas such as cyberwarfare, information warfare and space systems. SPAWAR’s chief technology officer holds over 100 patents. I have no idea what that all means, but it sounds like they do some very interesting stuff.
About three years ago, in the midst of Edward Snowden’s revelations about the National Security Agency, I learned that the Defense Department’s Inspector General had conducted a Top Secret investigation into allegations involving SPAWAR’s “access to U.S. persons data.”
That phrase “U.S. persons data” caught my eye. Under federal law, our intelligence agencies cannot spy on U.S. persons, i.e. American citizens. The misuse of “U.S. persons data” is intelspeak for spying on Americans so I filed a request under the Freedom of Information Act for the report.
The 37-page heavily redacted report I received began as a whistleblower complaint filed in December 2006 by an unnamed government employee. This employee claimed he was mistreated and ultimately reassigned after reporting that SPAWAR had misused classified information involving U.S. persons, which is forbidden under U.S. law.
Of the two main allegations cited in the report, one remains classified under a FOIA b(1) exemption, which involves matters of national security. The whistleblower’s second allegation was that SPAWAR personnel had been in the words of the report “photographing U.S. persons.”
There are several allegations involving misuse of imagery at SPAWAR in the report, most of which are completely or partially redacted.
The only one that is readable is a charge that SPAWAR had been collecting data without notice, warrant or authority “on U.S. persons in federal parks located at Point Loma,” a hilly peninsula in San Diego.
This allegation involved a camera is mounted on a tower at SPAWAR’s command HQ, located on the southern tip of Point Loma, adjacent to Cabrillo National Monument, which is operated by the National Parks Service. The camera, which can be rotated 360 degrees, is used for calibration purposes by pointing it at different government radars, the IG’s investigation found. The video feed from the camera goes to a laboratory and is not stored.
The IG also looked for inappropriate images on another imagery system, details of which remain classified on national security grounds. The system was tested at a site on Point Loma overlooking San Diego Harbor on the USS Dolphin, a research submarine, after it had been repaired for fire damage.
Other allegations involving satellite imagery or other technologies are heavily redacted.
The investigation by the DoD’s Inspector General did not substantiate the whistleblower’s complaints that SPAWAR was mishandling intelligence and possibly compromising U.S. persons information. The Inspector General did, however, partially substantiate the allegation that SPAWAR had failed to move quickly to correct deficiencies in its handling of intelligence information. The whistleblower had not been subject to reprisals, the IG’s investigation found.
What the report makes clear is that SPAWAR is a spook shop. It does R&D work for various components of the U.S. intelligence community. Some of the imagery allegations involved an R&D project for the Office of Naval Intelligence. Officials with the National Geospatial-Intelligence Agency (NGA), the National Reconnaissance Agency (NRO), which runs spy satellites, and one agency whose name was blacked out were interview for the IG’s report.
The table that follows is derived from the latest SEC data:
|1||Brandes Investment Partners||San Diego||$25,945,405,178||19,800|
|2||Torreycove Capital Partners||San Diego||$18,287,962,533||11-25|
|3||Guided Choice Asset Management||San Diego||$12,317,410,631||500,000|
|4||Stepstone Group||La Jolla||$11,926,414,601||100|
|5||Gurtin Fixed Income Management||Solana Beach||$9,929,753,485||500|
|6||Chandler Asset Management||San Diego||$8,893,810,490||800|
|7||LM Capital Group||San Diego||$5,215,906,609||26-100|
|8||First Allied Advisory Services||San Diego||$4,864,088,841||25,800|
|9||Clarivest Asset Management||San Diego||$4,150,278,731||11-25|
|10||Globeflex Capital||San Diego||$3,611,000,000||26-100|
|11||Dowling & Yahnke||San Diego||$3,047,962,290||1,000|
|12||Aletgris Advisors||La Jolla||$2,105,402,681||26-100|
|13||Rice Hall James & Associates||San Diego||$1,955,115,330||300|
|14||Nicholas Investment Partners||Rancho Santa Fe||$1,876,535,379||26-100|
|15||American Assets Investment Management||San Diego||$1,661,745,223||26-100|
|16||Independent Financial Group||San Diego||$1,647,108,373||5,700|
|17||Cuso Financial Services||San Diego||$1,564,559,871||6,000|
|19||LM Advisors||San Diego||$1,256,305,636||600|
|20||Pure Financial Advisors||San Diego||$1,196,742,924||1,400|
|21||Dunham & Associates Investment Counsel||San Diego||$1,191,835,520||3,900|
|22||Wall Street Associates||La Jolla||$1,075,551,757||11-25|
|23||Cardiff Park Advisors||Carlsbad||$1,034,925,745||325|
|24||IPG Investment Advisors||San Diego||$1,013,080,208||700|
There are some interesting little stories in here.
Torreycove Capital, founded in 2011, manages $18 billion for fewer than 25 clients, mostly pension and profit sharing plans. Torreycove was named in June as private equity consultant for the $79.2 billion New Jersey Pension Fund.
Brandes has seen its assets under management plummet since 2007, when it had $111 billion under management. According to Pensions & Investments magazine, Brandes’ two largest strategies — international equity and global equity — have been hit hard in recent years. In 2008, Brandes’ AUM declined more than 50% to $52.9 billion.
Stepstone may be the most interesting of them all. StepStone, founded by Monte Brem and Thomas Keck, has grown into a self-described”global private markets firm.” It oversees $75 billion of private capital allocations in addition to its $11.9 billion under management. Stepstone serves as private equity advisor for the states of Connecticut and Wisconsin.
Last year, Stepstone leased the entire 17th floor at the Lipstick Building, the site where Bernie Madoff ran his $65 billion Ponzi scheme.
Update: A federal appeals court denied Ray Lucia’s appeal to have his lifetime ban overturned in August 2016.
Mark Cuban, the outspoken Dallas Mavericks owner, is a regular on Shark Tank, a show where he’s regularly pitched by entrepreneurs seeking to expand their businesses.
Cuban and the other investors say “I’m in” or “I’m out” depending on whether they like the pitch or not.
Cuban is obviously a savvy investor, but he’s an explosive guy. He’s known in the sports world for his outbursts at NBA officials and referees that have cost him more than $1 million in fines.
Today, I learned that Cuban has filed a friend of the court brief on behalf of Ray Lucia, a former San Diego investment adviser who was permanently banned from trading by federal securities regulators. This legal brief is the courtroom equivalent of an angry outburst at NBA official.
Cuban filed his brief this month in Lucia’s appellate lawsuit against the U.S. Securities and Exchange Commission before the D.C. Circuit Court of Appeals. Lucia argued that his lifetime ban should be thrown out since his case was heard by an administrative law judge, instead of an appointed officer, as required by the U.S. Constitution.
His brief, filed Feb. 8, states, “As a first-hand witness to and victim of SEC overreach, Mr. Cuban has an interest in supporting petitioners’ appeal in this case, and in particular demonstrating that both statutory language and legislative history clearly show that Congress specifically intended that SEC hearings only be held before constitutional officers.”
Seems like weak stuff to me, but Mark Cuban is a vindictive fellow and he has an axe to grind.
The SEC accused Cuban of insider trading when he sold his stake in a Canadian Internet company to avoid a $750,000 loss. Cuban maintained his innocence, and was acquitted by a federal jury in Texas three years ago.
Cuban goes on to state, “When the laws are applied inconsistently or the process by which they are enforced is rigged to favor the government, capital formation is impeded because market participants do not have clear rules for understanding their investment risks.”
This is the point where I say “I’m out.” Ray Lucia wasn’t some bold entrepreneur chasing the next big thing. He was making millions fleecing retirees out of their nest eggs.
I started writing critically about Lucia in 2010 after his attorney threatened to sue me for $300,00 . I figured that if someone would bother with a bozo like me something must be seriously wrong. Turns out, I was right.
Back then, Lucia was at the height of his power. He had thousands of accounts and $300 million in assets under management. In the 12 months leading up to January 31, 2010, his family of companies reported $14.1 million in gross income, according to court records.
Lucia made money mainly by collecting commissions on those who fell for his “Buckets of Money” strategy. He pitched retirees at flashy seminars, often with the help of his buddy, actor Ben Stein.
Elderly clients were convinced to invest in non-traded real estate investment trusts (REITs) that locked away their money for years. That’s not a great position for an elderly person who needs liquidity, but when REITs are generating $8.7 milllion in gross commissions for Lucia’s companies in 2010, you might overlook such details.
Lucia assured his clients they could retire in comfort because he had backtested his “Buckets of Money” strategy and it was based on “science, not art.” The SEC called his bluff and today, Lucia says he is nearly bankrupt.
Someone, however, must be paying for Lucia’s legal team at Gibson, Dunn & Crutcher, one of the country’s top law firms. Is that you Mark?
Gas is cheap these days. Since 2014, the average price of a gallon of gas in the US has been cut in half to $1.70 and is headed still lower.
Except in California. A gallon of gas is $2.42 on average here. That’s more than 70 cents above the US average.
People in California are so used to paying more that this is seen as good news. Gas prices topped $4 in Los Angeles in the summer of 2015. So Californians are celebrating, not realizing that they are still paying more than the rest of the country.
Expensive is now normal in California. In 2015, a gallon of gas sold at the pump cost 70 cents above the U.S. average, according to the California Energy Commission. And for the month of January 2016, gas prices were 80.1 cents above the national average. That’s huge.
A difference of 70 cents may not sound like much, but multiply that by the 14.9 billion gallons of gasoline consumed in 2015 by drivers in the nation’s most populous state.
The number gets a lot bigger.
California drivers paid a whopping $10.4 billion more for gasoline in 2015 than the US average. Wow.
Why is this so? The reason frequently given is the state’s higher taxes and strict environmental regulations drive gas prices higher.
- California requires the world’s cleanest burning gasoline, which is more expensive to refine. Cost: 10-15 cents more per gallon.
- Anti global warming regulations add a pollution tax on refineries. Cost: 10-15 cents more per gallon.
- Gas taxes are higher in California. Cost in 2016: 10-15 cents.
So taking the low and high of these estimates (which like most of the information used in this post come testimony before a state panel) we get either 10+10+10 or 30 cents or at the high end, 15+15+15 or 45 cents. That accounts for less than half to two-thirds of the 70 cent-per-gallon difference between the average U.S. gas price and California’s.
Where does the other 25-40 cents go?
This, it turns out, is a vexing question, one that a state panel, the Petroleum Market Advisory Committee, has been trying for two years to answer.
Simply put, there isn’t enough gas supply to meet demand, especially in Southern California where most of the state’s population lives. That drives the average price of a gallon of gas higher.
In a properly functioning market economy, scarcity of gasoline, a widely available commodity, should serve as a signal to competitors. There’s money to be made selling gas in California! Competitors arrive with gas to sell. The supply increases until prices gradually fall back to normal.
But that’s not happening. Gas isn’t pouring into California, so prices remain stubbornly high.
The reason why is a bit surprising: A lot of it has to do with geography.
In old 16th and 17th European maps California was depicted as an island. In terms of gasoline, California is an island.
Almost all of California’s gasoline supply is produced inside the state by 13 refineries. And this put the state’s drivers at a major competitive disadvantage.
When everything is working smoothly, these refineries can supply enough gas to meet demand. In fact, California exports gasoline to Nevada and Arizona.
However, things don’t always work smoothly. Refineries break down or catch fire and the sudden shortage can cause prices to shoot up.
Gas prices have remained persistently high in Southern California since an explosion shut down Exxon Mobil’s Torrance refinery in 2015. The Torrance refinery produced somewhere around 10 percent of the state’s gasoline supply.
Outside California, when refineries hut down for routine maintenance or unplanned outages, drivers often don’t even realize it. Other refineries quickly make up the difference.
Take Florida. While California produces all its own gasoline, Florida is the opposite extreme. Florida has zero refineries. It is totally dependent on imported gas. So what does gas cost there? $1.75, a few pennies the national average.
Like most of the country, Florida gets its gasoline via pipeline from the Gulf region. The U.S. Gulf region is a giant gas exporting machine. Texas and Louisiana together account for half of the gasoline refining capacity for all of the United States.
Pipelines can move gas from Texas as far away as New York, but they don’t reach California. (Exactly why this is so is unclear, since a Gulf pipeline could reach Los Angeles through Arizona and New Mexico.)
Pipelines do link California to Nevada and Arizona, but the gas flows only in one direction: out of the state. Gas flows from the Bay Area to Northern Nevada and from Southern California to Las Vegas and Arizona.
If you look at the chart below, you’ll see that the arrows all point east. Also note there are no pipelines linking Northern and Southern California. This is another big problem.
Well, can’t ships bring gas to California to alleviate shortages? Why not ship gas from the Gulf to California in times of shortage?
California’s geography works against it. Outside California, there are only a few refineries in the world that produce gas known as CARB that meets the state’s strict standards. They are all far away.
The closest refinery that produces CARB gas is in the Gulf. It takes 10 days for a tanker from the Gulf to pass through the Panama Canal and reach California.
Due to a quirk of US law, it’s actually more expensive to ship gas to California from the Gulf than from refineries in Asia, even though the voyage from Asia is twice as long. It costs $10 per barrel to ship gas from the Gulf Coast to Los Angeles vs 6 a barrel from Asia.
Under a law known as the Jones Act, ships that sail from one U.S. port to another must be made in the USA and at least 75 percent of the crew has to be American citizens. There are very few Jones Act ships left.
It’s so hard to find a Jones Act ship that gas cannot easily move around even inside California. As noted earlier, there are no gasoline pipelines linking Northern California with Southern California.
At a hearing this month before the Petroleum Advisory Market Committee, an industry analyst noted that gas was 30 cents cheaper recently in Northern California than Southern California. But there was no way to move the gas south.
Few ships and no pipelines mean California’s gas market is isolated from the rest of the country. And this is the real reason why gas is much more expensive in California than the rest of the country.
We here in the Golden State are totally dependent on in-state refineries.
That doesn’t sit well with some people.
This concentration of power has given rise to charges that refiners are using market power to drive prices — and their profits — higher. We’ll take a look at this in our next post.