". . .Former U.S. President and CIA director George Bush is (was) an advisory board member for Barrick Gold Corporation, which is raping the U.S., Tanzania, Mali, Niger, Canada, Peru and?no surprise?Congo. Barrick Gold has been operating in the region around Bunia, Congo, the area from which refugees I spoke with had fled. People explained that Barrick gold mining operations near Bunia are guarded by the Uganda People?s Defense Force. The Uganda military also controls other gold mines near Bunia, as does an Israeli general paid in mining concessions for his military expertise during the first invasion of Zaire/ Congo (1996). . ." - http://www.thevoicenews.com/News/2002/0104...Snow-Congo.html
(JP Morgan Chase does a lot of business with Barrack Gold Corp.)
The following Complaint was filed on December 7, 2000, in the United States District Court for the District of Massachusetts, Boston, Massachusetts. For publication here, the original document has been converted to HTML format. While every effort has been made to reproduce it exactly, the official version is the filed document.
UNITED STATES DISTRICT COURT
District of Massachusetts
Civil Action No.
Reginald H. Howe, )
Bank for International Settlements, )
Alan Greenspan, )
William J. McDonough, )
J.P. Morgan & Co. Inc., )
Chase Manhattan Corp., )
Citigroup, Inc., )
Goldman Sachs Group, Inc., )
Deutsche Bank AG and )
Lawrence H. Summers, )
Secretary of the Treasury, )
1. This is a complaint for damages and injunctive relief arising out of manipulative activities in the gold market from 1994 to the present time orchestrated by government officials acting outside the scope of their legal or constitutional authority and certain large bullion banks active in the over-the-counter gold derivatives markets and on the Commodities Exchange ("COMEX") in New York. The complaint alleges horizontal price fixing in violation of Section 1 of the Sherman Act, securities fraud in violation of Section 10( and Rule 10b-5 of the Securities Exchange Act of 1934 ("Exchange Act"), common law fraud and breach of fiduciary duty by the directors of the Bank for International Settlements with regard to holders of its American issue, and violations of the Constitution by federal officials acting under color of federal law but wholly outside the scope of their legal or constitutional authority. Subject matter jurisdiction of the federal claims is based on 15 U.S.C. s. 15(a) (antitrust) and s. 78aa (violations of the Exchange Act), 28 U.S.C. s. 1331 (federal question), s. 1337 (commerce and antitrust) and s. 2201 (declaratory relief), and 12 U.S.C. s. 632 (international banking and financial transactions). Supplemental jurisdiction of the common law claims is based on 28 U.S.C. s. 1367.
II. Parties, Venue and Standing
2. The plaintiff, Reginald H. Howe, is an American citizen, residing currently and at all times material hereto at 49 Tyler Road, Belmont, Massachusetts 02478. He is suing in his individual capacity as: (1) the duly registered holder of six shares of the American issue of the Bank for International Settlements; and (2) the holder of 1200 depositary shares of Gold-Denominated Preferred Stock, Series II, of Freeport-McMoran Copper & Gold, Inc. The plaintiff is the proprietor of The Golden Sextant (www.goldensextant.com), an internationally recognized website containing commentaries, essays and analyses relating to gold, and a member of Golden Sextant Advisors LLC. The plaintiff has engaged in research and analysis on gold derivatives, which are instruments such as forward contracts, futures, options and swaps whose value is tied to -- or derived from -- the price of gold, and in this connection has uncovered considerable evidence of their use to manipulate gold prices.
3. While the plaintiff has not assigned any part of this action to others and retains full control thereof, he has received and expects to continue to receive support, both financial and informational, from the Gold Anti-Trust Action Committee Inc. ("GATA"), a civil rights and educational organization formed under Delaware law in January 1999 to expose manipulation of the gold market by certain bullion banks. The plaintiff was a contributor to GATA's study on the gold market, Gold Derivative Banking Crisis, which is posted at its website (www.gata.org) and has been downloaded in full PDF format more than 20,000 times. The plaintiff was also a member of the GATA delegation that met with the Hon. Dennis L. Hastert, Speaker of the U.S. House Representatives, in May 2000 to present to him the conclusions of the GATA study. Much of the evidence cited in this complaint comes from GATA's many friends and supporters worldwide.
4. The defendant Bank for International Settlements ("BIS"), frequently described as "the central banks' central bank," describes itself as an international organization but has not been so designated under the International Organizations Immunities Act, 22 U.S.C. s. 288 et seq. The BIS is headquartered at CH-4002 Basle, Switzerland. Its principal owners and customers are the central banks of the major industrial nations. The BIS accepts gold deposits, makes gold loans, holds approximately 200 metric tonnes of gold for its own account, and is an active participant in the gold market. Its manager responsible for foreign exchange and gold, Giancomo Panizzutti, received the "Man of the Year Award" from the COMEX at its annual gold dinner in New York recently. Under the auspices of the BIS, gold derivatives (along with foreign exchange, interest rate, equity and other derivatives) are subject to significant regulation and reporting, including: (1) the Basle Capital Accord, which sets minimum bank capital adequacy requirements for off-balance sheet derivatives; and (2) protocols for disclosure of information regarding derivatives, both in the financial statements of individual firms and through reports prepared by national regulatory authorities as well as by the BIS from country data submitted to it.
5. The defendant Alan Greenspan is Chairman of the Board of Governors of the U.S. Federal Reserve System ("Fed"), 20th Street and Constitution Avenue, NW, Washington, D.C. 20551. Mr. Greenspan has served ex officio as a director of the BIS continuously since September 1994. When the BIS was formed in 1930, 15% of its original capital -- the so-called American issue or tranche -- was subscribed publicly in the United States, thereby giving the Fed the right to vote these shares when, as and if it assumed the two seats allocated to the American issue on the BIS's board. However, by a public pronouncement issued May 15, 1929, Secretary of State Henry L. Stimson forbade "any officials of the Federal Reserve system either to themselves serve or to select American representatives as members of the proposed International Bank." In fact, the two American seats on the BIS's board remained vacant until July 1994, when Mr. Greenspan, without any formal authorization by Congress, the President or the Secretary of State, acted to assume them for the Fed. Since September 1994, the Fed's two nominees have participated fully in the affairs of the BIS and voted the shares of the American issue.
6. The defendant William J. McDonough is President of the Federal Reserve Bank of New York ("N.Y. Fed"), 33 Liberty Street, New York, New York 10045. Mr. McDonough has served as a director of the BIS continuously since September 1994, occupying the second seat allocated to the American issue under the BIS's original plan of organization. As of August 2000, approximately 7127 metric tonnes of "earmarked" gold belonging to foreign official institutions, mostly central banks, were held in custody accounts at the N.Y. Fed, down from 8621 tonnes at the end of 1995. At the end of 1999, the N.Y. Fed held gold certificates covering over 40% of the total U.S. gold stock, far more than any other Federal Reserve Bank, and up from 30% ten years previously.
7. The defendant J.P. Morgan & Co. Inc. ("Morgan") is a global financial services firm with its head office at 60 Wall Street, New York, New York 10260, and a usual place of business at 2 International Place, Boston, Massachusetts. Morgan is a major international bullion bank. Its wholly-owned commercial bank subsidiary, Morgan Guaranty Trust, is required to provide regular quarterly reports on its gold derivatives to the U.S. Controller of the Currency ("OCC"). As of June 2000, Morgan reported US$29.7 billion notional amount of gold derivatives, up from $18.4 billion one year earlier.
8. The defendant Chase Manhattan Corp. ("Chase") is a bank holding company with its head office at 270 Park Avenue, New York, New York 10017, and a usual place of business at 101 Federal Street, Boston, Massachusetts. Chase is a major international bullion bank and recently often a heavy seller of gold on the COMEX. Its wholly-owned commercial bank subsidiary, Chase Manhattan Bank, is required to provide regular quarterly reports on its gold derivatives to the OCC. As of June 2000, Chase reported US$35 billion notional amount of gold derivatives, up from $20.5 billion one year earlier.
9. The defendant Citigroup, Inc. is a diversified financial services holding company with its head office at 153 East 53rd Street, New York, New York 10043, and a usual place of business at 1 International Place, Boston, Massachusetts. Citibank N.A. ("Citibank"), Citigroup's wholly-owned commercial bank subsidiary, is a major international bullion bank, and is required to provide regular quarterly reports on its gold derivatives to the OCC. As of June 2000, Citibank reported US$11.4 billion notional amount of gold derivatives, up from $7.2 billion one year earlier. Together, Morgan, Chase and Citibank accounted for about 83% of all gold derivatives reported to the OCC in June 2000, and 75% one year earlier. In combined notional amount, the gold derivatives of these three banks increased by over $30 billion, or by over 65%, during this one year period while those of all other reporting U.S. commercial banks remained virtually flat at slightly over $15 billion.
10. The defendant Goldman Sachs Group, Inc. ("Goldman") is a global investment banking and securities firm with its head office at 85 Broad Street, New York, New York 10004, and a usual place of business at 125 High Street, Boston, Massachusetts. Goldman is a major international bullion bank and recently often a heavy seller of gold on the COMEX. Goldman is generally regarded as a major purveyor of gold derivatives. However, not being a commercial bank, Goldman does not report its gold derivatives to the OCC.
11. The defendant Deutsche Bank AG ("Deutsche Bank") is an international bank with its head office at Taunusanlage 12, D-60262, Frankfurt am Main, Germany, and a usual place of business at One Federal Street, Boston, Massachusetts. Deutsche Bank is a major international bullion bank and recently often a heavy seller of gold on the COMEX. In June 1999 Deutsche Bank acquired Bankers Trust, a U.S. commercial bank which itself had a significant gold derivatives business. In its 1999 annual report, Deutsche Bank reported approximately US$51.2 billion notional amount of gold derivatives at year-end, up from $16.2 billion one year earlier. Most of this increase came in the last half of the year.
12. The defendant Lawrence H. Summers is the Secretary of the Treasury. Pursuant to 31 U.S.C. s. 5302, the Secretary of Treasury has exclusive control of the Exchange Stabilization Fund ("ESF") subject only to the approval of the President. The ESF and the Fed are the only instrumentalities of the federal government with broad statutory authority to trade in gold. This authority was conferred at a time when the dollar was officially defined by Congress as a specified weight of gold, and when maintenance of the dollar's official gold value was a matter of substantial legal and practical concern. Public financial statements of the ESF provide evidence of its intervention in the gold market, particularly since 1998.
13. Collectively the defendants represent all the principal parties required for a just and complete adjudication of the price fixing claims. The publicly reported gold derivatives of two other major international banks engaged in this business, UBS AG and Credit Suisse Group, do not show the same extraordinary growth patterns over the past two years as the gold derivatives of the defendant bullion banks, nor have these two Swiss-based banks recently been reported as frequent heavy sellers of gold on the COMEX. An examination of the gold hedging activities of the world's two largest gold mining companies, AngloGold Ltd. based in South Africa and Barrick Gold Corp. based in Canada, suggests that both companies have material non-public knowledge of the gold price fixing scheme which they have used to their advantage, but neither company appears to play a critical role in implementing the scheme.
14. The plaintiff purchased his BIS shares, which then traded over-the-counter in Basle but now trade on the Swiss Exchange, in 1989 through an American brokerage firm. The shares were held in street name until 1997, when the plaintiff registered them in his name on the books of the BIS and soon thereafter received share certificate no. 031419 inscribed to him at his U.S. address, where the certificate remains. The plaintiff purchased his 1200 depositary shares of Gold-Denominated Preferred Stock, Series II, of Freeport-McMoran Copper & Gold, Inc., at various times from 1995 through 1999. By its terms, each depositary share pays a quarterly cash dividend equal to the value of 0.0008125 ounce of gold and will be redeemed in February 2006 for the cash value of 0.1 ounce of gold. The quarterly dividends are cumulative, but to date all payments have been timely made based on the arithmetic average of the London PM gold price over the relevant preceding five-day period.
15. By a "Note to Private Shareholders" dated September 15, 2000, mailed to the plaintiff at his U.S. address, the BIS gave notice that its board planned to vote at a meeting on January 8, 2001, to compel all private holders of the American, Belgian and French issues to surrender their shares against a payment of SwF16,000 (approx. US$9280) per share notwithstanding an opinion from J.P. Morgan & Cie SA, a wholly-owned French-based subsidiary of Morgan, setting the per share net asset value at US$19,099, or more than twice what the BIS proposes to pay for the shares that it plans to take.
16. Venue is based on 28 U.S.C. s. 1391((2) as to all defendants, s. 1391© with respect to the corporate defendants having usual places of business in Boston, Massachusetts, s. 1391(d) with respect to the BIS and Deutsche Bank, and s. 1391(e)(2) and (3) with respect to Messrs. Greenspan, McDonough and Summers, all of whom are acting "under color of [federal] legal authority" with respect to the matters alleged notwithstanding that their conduct falls wholly outside their legal and constitutional authority. Venue of the claims under the Exchange Act is also based on s. 27 thereof, 15 U.S.C. s. 78aa. Venue of the claims under the Sherman Act is also based on s. 12 of the Clayton Act, 15 U.S.C. s. 22, as to the corporate defendants. . ." - http://www.goldensextant.com/Complaint.html#anchor3130