Friday, April 13, 2007

Martin Armstrong's Punishment by a Corrupt State

On April 27, 2007 Martin Armstrong's - record 7+ Years Contempt of Court Incarceration was ended. He will now have to start another 5 Years in prison which means he will end up in prison for 12 years for a very questionable criminal charge. His right to a speedy trial was denied, he was not allowed to hire top lawyers and in fact the court took his money away from his original lawyers. He never had a proper trial, he was forced into a plea after they put him into solitary confinement for several days without sleep, as well as having been almost killed by a murderer who was allowed into his cell and then beat him with a typewriter causing Martin to lose many of his teeth while the prison guard looked on according to other inmates, Martin then had to spend a week in intensive care, the man who smashed a typewriter on his face was never charged. This shows how corrupt the US Justice System is, most likely deliberately getting a prison thug to attempt to murder Martin! Nobody in the US government cares though, what has it got to do with their salaries and gold plated pensions. As Martin says: "Strangely there was not one wire transfer (of Princeton Economic's client money) into my personal accounts." No mention was made of the fact that the CIA tried to get his $60 million super-computer model in 1998 a year before he was charged criminally - as Princeton Economics employees witnessed and was written about by one employee named James Smith. The Court then demanding Martin hand over assets (including his computer model) before he had his trial to determine if he was 'Innocent Until Proven Guilty' is wrong and a major conflict of interest by the government since the CIA wanted his model in 1998. A brilliant man will continue to rot in prison.

Southern District of New York Judge John Keenan sentenced Armstrong to the maximum , saying he had no choice but to make the criminal sentence consecutive to the civil contempt, even though the Judge could have legally given Martin credit for time already served.
In a interview with Martin's lawyer: It was stated that they filed a petition with the Supreme Court for holding Martin in contempt for more than 18 months, which is unlawful. Mr Sjobolm is hoping that "the SC grant cert, find in our favor & Mr. Armstrong will be credited for time served and be released."

The criminal sentence follows Armstrong's guilty plea (under physical duress after being put in solitary confinement without sleep for several days) last August for conspiracy to commit securities violations.

Martin did not steal money, plain and simple. What he or employees allegedly did was:

(1) Lose money trading (not a crime) and Martin claims that Republic Bank employees did illegal trading in his Princeton accounts.

(2) Failed to disclose such trading losses in some cases, some have written that it was some Princeton or Republic employees that may have actually lost the money and kept it hidden.

(3) Allowed Republic to consolidate client funds to limit their own liability and concern for accounting, which then of course allowed payment to some old clients with new client money.

Since Martin's original high end lawyers had his money taken away from them he never got a proper defense team for this, his mother hired one lawyer who while he tried hard was not likely of the same quality as the original team. He was tortured in solitary confinement for days (supposedly for damaging a vent cover!) after an attempted murder by an inmate who was allowed into his cell, proceding to strangle Martin and smash a typewriter over his face causing him to lose many of his teeth and requiring him to be transferred to an intensive care hospital room for a week. After all that they pretty much forced a minimal guilty plea out of him in desperation, since he had been in prison without a trial for 7 years, his life was going by.

The real reason Martin continues to be held in prison as his daughter Victoria Armstrong has stated may be because he will not hand over his computer model's code which President George W. Bush's CIA tried to aquire in 1998. This is constitutionally illegal for the US government to seize copyright material and private property. America is supposed to be all about protecting private property from totalitarian government.

Judge Keenan, who also ordered Martin Armstrong to pay $80 million and $1 in restitution that even the government acknowledged he did not have, said "every criminal case is a tragedy but this is a particularly sad one."

The 57-year-old Armstrong, after being rebuffed in a last-minute attempt to appear pro se, spoke for about 25 minutes, taking the judge on a tour of the origins of what he called the "franchising" of Princeton Notes for large-scale currency trading that began in 1992.

When Keenan told him to get to the point, the former head of Princeton Economics International Ltd. portrayed his downfall as anything but his own fault.

"I was too occupied. I didn't pay attention," he said, his voice quavering. "I don't think this is a situation where I started to go get money from someone. [I earned a] $78,000 salary. I worked all the time. I took care of my kids and I guess that's the most important thing. I trusted people I shouldn't have trusted."

The government alleged that Armstrong was the key player in a multi-billion dollar "Ponzi scheme," (even though it was never proven that Armstrong got any money from the alledged misdeeds) one of the largest ever, which covered the losses of initial investors with money from new investors, said Assistant U.S. Attorney Alexander Southwell. It charged he made misrepresentations about both the value of assets in some accounts and his trading record and illegally commingled funds from separate investor accounts.

Republic Securities, the broker-dealer used by Armstrong, pleaded guilty in 2002 to conspiracy and securities fraud charges. Two of its employees entered guilty pleas in 2004, as did a former employee of Armstrong.

Both Armstrong and his lawyer, David Cooper, disputed the use of the term "Ponzi scheme" Tuesday, saying there was no evidence Armstrong sought to enrich himself.


That claim is disputed by Alan M. Cohen, the receiver appointed by Judge Richard Owen in the civil case brought against Armstrong and his Princeton companies by the Commodity Futures Trading Commission and the Securities and Exchange Commission.

Owen initially ordered Armstrong jailed in 2000 for contempt for failure to disgorge some $1.4 million in assets -- a figure that later grew to more than $14 million and included gold bars, rare coins and even a bust of Julius Caesar. The civil court never proved that any of these assets were bought with Japanese investors money. They also are illegally trying to get his $60 million computer model that the CIA tried to aquire in 1998.

Armstrong contended that he no longer had the assets, but Owen did not believe him. A seven-year fight over the limit of the contempt power of federal judges was under way as Armstrong refused to budge and launched challenge after challenge to his detention from his jail cell at the Metropolitan Correctional Center.

Ultimately, on Armstrong's fourth trip to the 2nd U.S. Circuit Court of Appeals, attorney Thomas Sjoblom, now of Proskauer Rose, argued in January 2006 that the inherent power of federal judges to jail for contempt is limited by the Anti-Detention Act, 18 U.S.C. 4001(a), which states no citizen shall be imprisoned unless authorized by an act of Congress, and the so-called "recalcitrant witnesses" act, 28 U.S.C. 1826, which gives the power to jail non-cooperative witnesses for up to 18 months.

The argument was rejected by the court last November, with then-Chief Judge John M. Walker writing that Congress authorized "indefinite coercive civil confinement" in the Judiciary Act of 1789 and finding that Armstrong could not be considered a witness.

The court also took the unusual step of removing Owen from the case, saying reassignment was the best course because the long-running dispute over the missing assets could use a "fresh look by a different set of eyes."

Those eyes now belong to Southern District of New York Judge Kevin Castel, who will hold an April 27 hearing on the civil contempt.

Mr.Cooper, a veteran defense attorney who said this was his last case before retirement, went out firing, saying his client was in a bizarre state of legal limbo because of Owen, the absurdity of which became complete when Keenan was unable to consider the civil contempt in determining the criminal sentence to give Armstrong.
"I've never seen a criminal case in which defendant has been subpoenaed to turn over the things he stole," he said. "The fact we aren't allowed to talk about seven-plus years in prison for refusing to turn over items he is supposed to have stolen is crazy. If that's the law, it's crazy.

"The contempt was outrageous and everyone knows it was outrageous and Judge Owen was notorious for the outrageousness of his conduct," he said. "Why did they take it away from Judge Owen? Because he was going to keep him in. The circuit was trying to say 'Let him out -- we are beginning to look draconian.'"

The implication or "wink" that the circuit gave to the lower court, he said, was "resolve" this matter, Cooper said, "But Judge Castel didn't catch the wink."

Despite Cooper's comments, Castel has been pressing hard for both sides in the civil action to reach a settlement.


Anonymous said...

I am appalled with the treatment of Mr. Armstrong and this latest sentencing. You are correct that some murderers, rapists and other truly bad guys do less time.

Martin must have really stumbled across some important formulai that is causing this incarceration.I hope that someone has that computer locked up real tight.

There are still people out here who care about Martin Armstrong.
My heart goes out to him . . . .

Anonymous said...

As a former employee of Princeton/Cresvale I was privy to some of the reports at the start of the investigation. All of these basically say that Martin had inherited some questionable staff and their practices in Japan when he was asked to rescue Cresvale.

The treatement of Martin is appauling, in line with some of the things we faced such as being told they will 'arrest and punish you' while they were investigating things - without proof as Martin was out of the loop. Partly this was to do with Martins trust in people, mainly to do with them scheming against him. The reports for the FSA had comments such as Cresvale 'admitted that figures on the monthly performance sent from PEI were amended intentionally' by Cresvale staff!

It was a honour to work with Martin and I hope after all this he bounces back, if you can after such a thing.

If he even needs a good IT guy in the future again I will be listening :)

Admin said...

That Crestvale doctored report is shocking. Seems to imply a bigger conspiracy to pin Japanese corporate losses on Martin Armstrong and Princeton Economics.

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twestgard said...

Here's the explanation of why this guy was sent up for a long time, in their own words:

"Martin did not steal money, plain and simple. What he or employees did was:

(1) Lose money trading (not a crime).
NOTE: true, but this isn't the point.

(2) Failed to disclose such trading losses in some cases.
NOTE: a.k.a. multiple counts of fraudulent reporting - each a federal & state felony.

(3) Allowed Republic to consolidate client funds to limit their own liability and concern for accounting, which then of course allowed payment to some old clients with new client money."
NOTE: a.k.a. "stealing money" - another (set of) federal & state felony crime.


Extended Analysis:

The key to all of this is to take a very hard look at the phrase: "limit their own liability ... with new client money." If you think carefully about that, it tells you everything you need to know about why this guy got 12 years. He was lucky to only get that.

This apologist is using a definition of "steal money" that is either very clever or very foolish. It's true that lots of people think of "stealing money" only in the sense of strong-arm robbery, or doing a sneak-thief act. Those are definitely stealing money, but not the only ways. They are the least imaginative ways, so they are the ones that most street criminals come up with. However, you would think that someone sufficiently experienced in financial matters to claim extraordinary expertise in predicting stocks would be able to cope with the most basic of fiduciary crimes that are also ways to "steal money" under the law as it has existed since before the United States was a country, and during the entire existence of this nation. (Plus the more modern reporting requirements.)

For example, under the law as it has existed for hundreds of years, one way to "steal money" is to be someone's fiduciary / trustee, and then use their money in a way that violates the trust, particularly to pay off one's own debts. You can find prosecutions for this going back centuries. If, for example, you have lost other people's money in investments and want to make them happy, you are of course legally permitted to do that by paying them back. BUT LEGALLY ONLY WITH YOUR OWN MONEY! If a trustee or fiduciary uses someone else's money to do it, it's "stealing money" under any legal definition.

If you take money from other people, not as payment, but in trust, as a fiduciary (including as a brokerage) and committed to invest it for their best interests and not solely for your own benefit, it is only money that you hold, not that you own. There is a HUGE difference under the law, and it is something that is taken very seriously in the training of accountants, bankers, brokers, and lawyers. People with those specialized licenses are routinely prosecuted for violating it. This is news to no one who handles other people's money as a fiduciary.

So while I understand that someone with no specialized financial training might buy into the harmless-sounding "limit their own liability ... with new client money," but to anyone who understands the responsibility of being a fiduciary, it is as ridiculous as "All I did was ask for some money ... while holding a gun to his head." So, not only is the guy simply a thief, but his defender on the blog is either spectacularly naive, or a really bad liar. Either way, the credibility factor continues to drop.

Add to that the "All I did was fail to report - c'mon!" That flies pretty well WHEN YOU'RE NOT CONCEALING A THEFT, but when you compound the original theft with lying about it in one of those mandatory reports, that is exactly what those draconian sentences for false reporting are there for. Making light of false reporting as part of a scheme to commit financial fraud... Who doesn't know how bad that is? My turn - c'mon!

So, the upshot is, I think this guy is an outright criminal fraudster who is lucky that he only got 12 years. It appears he hasn't reformed very well, if he's still out there defending his actions instead of trying to move past them. It's best to protect the public by keeping him in until he either grows a conscience or dies.

Admin said...

Twestgard: You conveniently leave out the fact that the CIA wanted Armstrong's model, were denied it and then the government tried to demand it be handed over, a proprietary copywritten model. They demanded Armstrong hand over the computer code and other valuables before he had had his court case, they took away all his money, including money his original lawyers recieved to defend him. He was denied due process, denied his constitutional rights. People like you would be quite happy if Hitler took over and just forced people to do as they say. Go read the JerseyGOP article, that editor is a right wing Republican and he wrote the whole thing stunk. Martin Armstrong is one of the most brilliant economic analysts ever, as he said 'strangely not one transfer of Princeton Economics client money made it into Armstrong's personal accounts.

twestgard said...

We are two people talking past each other. You are correct in saying that I did not address the CIA thing. I don't have an opinion on that, but it's a matter of changing the subject here..

What I addressed was your statement that he didn't do anything wrong or commit any crimes, which is not accurate, for the reasons I pointed out. Maybe the CIA was after him, I'll take your word for it, at least for the present discussion. But if you know that the CIA is after you, it's a really good time to keep your disclosures up to date and accurate, and otherwise mind your p's and q's. If the CIA took advantage of crimes he committed, that's a different thing from him not committing any crimes to begin with.

Admin said...

I did not write what you have quoted as to what he did, it was taken from another site, a discussion forum, I think the Cassandra Tokyo one. From what I have read by other people there is some evidence that other Princeton employees may have mismanaged some accounts and even hid it. Martin was a very busy guy, giving lectures, writing long complex articles which you can see a small samlpling of here. This was a man that was capable of making good money in his business as he did for many years, there was no need for him to start misleading people. I talked with him in person several times, he is a decent man that would spend long periods of time talking to dozens of attendees to his lectures, because if was his passion, economic analysis. I will never believe that his motive was to be some sleazy rip off artist.

Admin said...

Further I should say that you cannot ignore information that does not fit with your paradigm, the information about his computer model source code being sought after by the CIA. This is well documented by James Smith and other employees, including a well know analyst called Barclay T. Leib owner of Sandspring Advisors, you can find his website.

Admin said...

One more important point I have is that Google was scraping a couple of negative and misleading sentenced that I wrote on the Topix site, they did not scrape the main article which is in strong defense of Martin. I pointed out what had happened to Martin's lawyer and within a day of him speaking to them about it they put those referrenced sentences below two other search links. This shows that someone (most likely the government) got to google and asked them to display a search for Martin Armstrong in a certain way. More freedom in America!

Russ said...

Re: Twestgard's comments,

Another very important point is how the regulatory people grilled Martin about 'manipulating the world's economy', this is a pretty big clue as to why they really went after him. After he predicted the crash of 1998 to the day that caused the regulators to sit up and take notice. He was not manipulating them he was predicting them and positioning capital accordingly. Is not the USA supposed to be pro-capitalist?

Does the government believe in free markets or not? Why is it alright for Goldman Sachs and many other Wall St. firms to speculate on market direction but not Mr. Armstrong or his clients?

Why is it acceptable for Warren Buffet to take a Billion dollar position in Silver when he is supposed to be a stock investor etc.?