Catherine Austin Fitts | The Myth of the Rule of Law, Or How the Money Works

What scares me the most about this paper is it was written over 10 years ago…

This has been going on for a long, long time…


The Myth of the Rule of Law, Or How the Money Works – The Destruction of Hamilton Securities Group

Fitts served as managing director and member of the board of directors of the Wall Street investment bank Dillon, Read & Co. Inc., as Assistant Secretary of Housing and Federal HousingCommissioner at the United States Department of Housing and Urban Development in the first Bush Administration, and was the president of Hamilton Securities Group, Inc., an investment bank and financial software developer.

Over the course of several years my company Hamilton Securities and I were subjected to a government investigation that ultimately resulted in the destruction of Hamilton and the loss of my personal fortune. This spring the government finally dropped its investigation, having failed to find or establish any evidence of wrongdoing at Hamilton or by me. This was not a surprising result, because there was none to find. Nevertheless, over the course of five years and at a cost of millions of taxpayers’ dollars, Hamilton and I were harassed into financial oblivion. Why?

It started in 1996—at the same time that the San Jose Mercury News was preparing a story exposing the US government’s marketing of crack cocaine into South Central Los Angeles in the 1980 ’s. The year before Hamilton Securities had launched a company in the inner city to provide data servicing for our software tool, Community Wizard. The Wizard used geographic information systems software (GIS) to map the geographic patterns of government investment, including defaulted mortgage loans of the Department of Housing and Urban Development (HUD). At that time we put three maps up on the Internet site for a place-based survey for the HUD loan sales. They showed defaulted HUD mortgages in New Orleans, the District of Columbia and South Central Los Angeles.

High and expensive rates of HUD mortgage defaults coincided with areas of heavy narcotics trafficking in South Central LA. It seemed understandable that someone might want the Wizard team to be otherwise occupied when the San Jose Mercury News published the “Dark Alliance” series regarding the Iran- Contra drug dealing in South Central Los Angeles. Otherwise we might notice the suspicious patterns that exist between HUD defaulted mortgages and government sponsored narcotics trafficking.

After initial efforts to shut us down failed, a team of investigators working for the Department of Justice (DOJ) seized our office and destroyed our software to ols and databases. If Wizard and supporting databases had not been stolen or ordered wiped clean from our computers, it would have linked national housing data to local housing data. It would have linked the databases on local housing down to the street address and local mortgage originations to the data on pools of housing tax-exempt bond and mortgage securities whose credit was backstopped by FHA and Ginnie Mae at HUD.

Wizard may have revealed that allegations that some US-guaranteed mortgage securities were fraudulently issued and were illegally draining HUD’s reserves merited serious investigation. Was it possible that the US Treasury and the Office of Management and Budget (OMB) were operating HUD as a slush fund to illegally finance black budget operations? The possible securities fraud implications would be without precedent. Were covert operations and political graft the political raison d’être for HUD’s existence?

The targeting of Hamilton and Fitts stopped in 2001. The final attempt to frame me was closed after 18 audits and investigations and a smear campaign that reached into every aspect of my professional and personal life. Years of hard evidence as to the baselessness of the government’s goals and the criminality of its conduct had been ignored. The corruption of the courts, lawyers and the Department of Justice had become painfully visible, then predictable, then comical. The f lood of federal credit, subsidies and contracts bought off everyone around us and showed what happens when human greed and the need for safety mixes with cheap money.

Several things helped to finally bring relief. In 2000, we began to put all documentation on a website ( thus creating a po ol of evidence freely available to reporters, editors and readers. A second factor was that a great deal of money was unaccounted for from the US Treasury. This now totals over $3.3 trillion based on General Accounting Office (GAO) reports. The notion that the US Treasury, OMB and DOJ might be capable of significant fraud was gaining credibility in the investment community. A handful of courageous reporters published stories about what was happening.

However, in a deeper sense, the targeting started long ago when narcotics trafficking and HUD fraud destroyed the Philadelphia neighbourhood where I grew up. It was then, as a young person, that I learned that the law was a to ol of coercion—that there was no rule of law. It is a terrible truth. As a white, Anglo-Saxon protestant I had been counting on the rule of law to protect me. I found, instead, that it is a powerful myth which has fuelled great wealth for those who run and rule the economy—both legal and illegal. The rule of law is the basis of liquidity. That is why so much time and money goes into sustaining the myth.

Capital gains are highest for those who can combine liquidity, the value creation of stock price multiples, and the power of new technology with the high margins of narcotics trafficking, financial fraud and control of the Congress, the courts and the enforcement agencies to create and protect markets. Transaction costs rise and market multiples fall as the myth deteriorates. The destruction of Hamilton Securities is a case study in the disintegration of the myth of the rule of law. As that disintegration debases the treasuries and currencies of nations and destroys the equity of communities, it is making its way to your do or one way or another.

Full report below…




The Myth of the Rule of Law, Or How the Money Works

One Response to “Catherine Austin Fitts | The Myth of the Rule of Law, Or How the Money Works”
  1. Bobbi Swann says:

    Yes, very scarey! I believe Catherine Austin Fitts was one of the feature speakers in the newly released movie “Thrive”. And still speaking out on Solari. Wake Up America! It’s time to go to work to save our country!

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