Giuliani firm took shady commissions from FL data mining company (Seisint)

[seafan]

Although this post's main focus is on Rudy Giuliani, it also sheds quite a bit of detail on Hank Asher, the creator of Seisint's MATRIX, and Jeb Bush's involvement in pushing it at the White House/Homeland Security.




Giuliani Firm Stood to Benefit From U.S. Deals, Florida Company’s Files Show

By ERIC LIPTON
December 14, 2007

WASHINGTON — Rudolph W. Giuliani’s consulting firm was hired in 2002 to help a Florida company build its business under a contract that called for Mr. Giuliani’s firm to be paid in part for lining up work with the federal government and other clients, company records show.
Federal law prohibits payment of a commission in return for a federal contract, a standard that the firm, Giuliani Partners, said it did not violate.

The deal between the firm and the contractor, Seisint of Boca Raton, was signed with the expectation that Mr. Giuliani’s high profile and connections would help the start-up company obtain federal contracts as well as nongovernment work, said Michael Brauser, co-founder of Seisint and once a major shareholder.

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“There is nothing untoward about anything we did in connection with Seisint,” (Daniel Connolly, a Giuliani Partners executive) said. “This is much to do about nothing.”

The assertion the firm may have skirted federal contracting rules was first raised in an article on Thursday on the Time magazine Web site. The firm’s reliance on commissions as part of its compensation from Seisint seems to be bolstered by a copy of the minutes of the Seisint board meeting from December 2002, when it hired Giuliani Partners.
The minutes cite a contract based on a finder’s fee, saying the $2 million-a-year deal was premised on payments “on commissions to be earned for sales generated by Giuliani Partners.”

Six months after Seisint hired the firm, the Homeland Security Department gave an $8 million grant that a nonprofit group in Florida used to pay for a system to help identify potential terrorists or criminals. About $5 million of the work went to Seisint, which sold access to a large database of personal information, a spokesman for the group said.
Mr. Connolly said the Giuliani firm was not involved in that work’s going to Seisint, although it represented the company.

The Giuliani firm ultimately made about $25 million as a result of its deal with Seisint, based on fees, bonuses and the sale of stock options after Seisint was bought in 2004 by the Reed Elsevier Group, owner of LexisNexis.
Mr. Connolly said Giuliani Partners set up a demonstration for Seisint at the Homeland Security Department, but that the meeting had no role in giving out the federal work.

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A little history:

Seisint Inc.
Giuliani's Involvement in the 'Matrix' Project

Giuliani Partners was hired in December 2002 by Florida-based Seisint, Inc. to help market its data-mining product called Matrix. The product got a high-level airing in the White House in January 2003 at a meeting attended by Homeland Security Secretary Tom Ridge, FBI Director Robert Mueller and Vice President Dick Cheney. At that meeting, Florida Gov. Jeb Bush, the president's brother, gave a presentation in favor of the product. But by late 2003, reports surfaced that Seisint chief Hank Asher, a Giuliani friend, had smuggled cocaine into the United States earlier in his life. The Matrix project eventually fizzled and questions were then raised inside Seisint about the size of the firm's compensation.



Former Florida Gov. Jeb Bush made a presentation at the White House in favor of Seisint, Inc.'s Matrix product. January, 2003

Anti-Terror Database Got Show at White House

By Robert O'Harrow Jr.
May 21, 2004; Page A12

One day in January 2003, an entrepreneur from Florida named Hank Asher walked into the Roosevelt Room of the White House to demonstrate a counterterrorism tool he invented after the Sept. 11, 2001, attacks. Soon to be called Matrix, it was a computer program capable of examining records of billions of people in seconds.

Accompanied by Florida Gov. Jeb Bush and the state's top police official, Asher showed his creation to Vice President Cheney, FBI Director Robert S. Mueller III and Tom Ridge, who was about to be sworn in as secretary of the new Department of Homeland Security, according to people at the meeting.

The demonstration startled everyone in the room who had not seen it before. Almost as quickly as questions could be asked, the system generated long reports on a projection screen: names, addresses, driver license photos, links to associates, even ethnicity. At one point, an Asher associate recalled, Ridge turned toward Cheney and nudged him with an elbow, apparently to underscore his amazement at the power of what they were seeing. A few months later, Ridge approved an $8 million "cooperative agreement" from his department to help states link to the computer system.

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One document, reported by the Associated Press yesterday, showed that Asher and his colleagues had created a list of 120,000 individuals with personal attributes that gave them a "high terrorist factor" score deemed worthy of extra attention from authorities.

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In fact, Jeb Bush was working hard to recruit more states to join the MATRIX database.

Mother Jones
September/October 2004 Issue

By Jim DeFede

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The program then culled through databases, rating millions of people for terrorist potential according to a combination of factors including: age, gender, ethnicity, criminal record, credit history, how they shipped or received packages, anomalies in Social Security numbers and driver's licenses, and addresses within the vicinity of known terrorists. Within weeks, the system had a list of 120,000 names with High Terrorist Factor (HTF) scores.

Three years later, Asher's brainchild has blossomed into the MATRIX—the Multistate Anti-Terrorism Information Exchange, a network of state databases subsidized by the Department of Homeland Security and the Justice Department. While Seisint provides its databases, technology, and facilities for the project, the Florida Department of Law Enforcement and a nonprofit research institute in Florida manage the day-to-day oper-ations. Law enforcement agencies in four other states—Connecticut, Michigan, Ohio, and Pennsylvania—are enrolled in the project, which allows them to conduct searches for criminal investigations in return for putting their own databases into MATRIX. Although a number of states have withdrawn from the program, citing administrative costs, Florida governor Jeb Bush, a strong backer of MATRIX, is working to recruit more.

The American Civil Liberties Union, however, wants to eliminate federal funding for MATRIX. "They are searching through disconnected records, which may not be accurate, looking for patterns and drawing conclusions about people," says Barry Steinhardt, director of the ACLU's Technology and Liberty Project. "One conclusion they drew is that there are 120,000 suspected terrorists in the United States. If there are 120,000 terrorists in America, then we are in much deeper trouble than anyone ever imagined." Even worse, the list has never been made public, meaning that thousands of people are unaware that they have been singled out as potential terrorists.

Steinhardt notes that federal officials are administering this program through the states, letting the MATRIX avoid scrutiny. "There is no question they have hidden this from Congress," he says.

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For civil libertarians, the MATRIX conjures up memories of another data-mining project—Admiral John Poindexter's Total Information Awareness program, which the Senate, out of civil liberties concerns, nixed in January 2003 before it launched. MATRIX, however, has escaped congressional scrutiny since it is considered a state program. And while MATRIX officials say that they are not using the system to create lists of potential terrorists, critics worry that nothing forbids them from doing that in the future.

But Asher is unlikely to be involved in such a decision. In July, Seisint was sold to Reed Elsevier, the Anglo-Dutch information and publishing company that owns LexisNexis. He had already resigned from Seisint's board of directors, as federal officials last year became aware of his smuggling planeloads of cocaine into the United States in the early 1980s. (He was never charged with a crime and became an informant against other drug traffickers.)

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Rudy: All Business

By Michael Weisskopf and Massimo Calabresi
December 13, 2007

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But the Seisint deal wasn't as perfect as it seemed. One problem: the payment of percentages or commissions to "solicit or secure" government contracts is prohibited by federal law and laws of some states. Tom Susman, ethics chairman of the American League of Lobbyists, says the bar on commissions is intended to eliminate incentives for middlemen to bend the rules to land a contract. A GP official who refused to be named insists that the firm never received "commissions" from Seisint — despite what Brauser and Latham remember and despite the fact that payments to GP are labeled "commissions" in both the minutes of a Seisint board meeting and a key financial statement. Instead, says the official, GP earned "special bonuses" based on the achievement of corporate "milestones." Another problem: Seisint CEO Asher had a shady past. After the statute of limitations made his crimes unprosecutable, he admitted to having been a cocaine smuggler in the 1980s. He stepped down from Seisint's board in August 2003. Giuliani told Vanity Fair in 2004 that Asher's "mistakes are way behind him."

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But however promising MATRIX's future appeared, it was unable to escape the concerns of privacy watchdogs. In early 2004, a commission appointed by Utah's Governor recommended dropping MATRIX over privacy concerns. One commission member, Elizabeth Dunning, said the program's accumulation of personal data on innocent Americans was "shocking" and "outrageous." Shortly thereafter, however, Seisint was sold to the British-Dutch firm Reed Elsevier. The sale netted GP $24 million, records show, with half of that made possible by the lower stock-option price. "A lot of people made a lot of money on the sale of Seisint," said Latham. " was one of them." Did law enforcement benefit too? Hard to say. By mid-2004, fewer than half the states that had originally signed up for MATRIX remained in the program, and by the end of the year the rest had quit. Less than two years after Giuliani signed on to market MATRIX, the program was dead.

Can't end this post without including this bit of shady history on Hank Asher, the creator of MATRIX, and good friend of Rudy Giuliani and Jeb Bush....



The Net's Master Data-miner

By Michael Shnayerson
December 2004

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Asher began making pickups from Colombia in his Aerostar. First he flew the whole way directly, strapping on "Lindbergh tanks" of extra fuel. Then he began stopping to refuel in Belize, where he had a house. Seven times between Easter and June of 1982, he flew loads of up to 700 kilos to a ranch in Florida's Okeechobee County.

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Asher was done with smuggling cocaine, but not with snorting it. He figures he was addicted for about a year, until he stopped cold turkey and never did the stuff again. Now he grew remorseful about his seven-week stint as a smuggler. And so one day he suggested to his island neighbor and friend, renowned criminal lawyer F. Lee Bailey, that the two of them do what they could to clean up the drug traffic based in Great Harbor Cay.

Bailey had been speaking out for some time about the smugglers. One had retaliated by burning down Bailey's house. "It inspired me," recalls the superlawyer of later O. J. Simpson fame, "to be interested in some affirmative action."

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Bailey called the Miami office of the D.E.A. and said he had a guy the feds should meet. "Bailey offered up Hank as someone who could help get some of these guys out of business," explains Bill Shrewsbury. At the D.E.A.'s direction, Asher approached the smugglers he knew—Americans who were working with the Colombians—to persuade them to get out of the business. The deal, explains Asher, was they didn't have to rat on their friends. "He was an envoy for us to convince them that if they didn't help they would go to jail," says Shrewsbury of Asher. "He did a real decent job, because the Colombians left Great Harbor."

Ironically, it was only Asher's campaign to stop other smugglers that made his own brief stint as a smuggler known to law enforcement: the D.E.A. had had no idea who he was when Bailey first brought up his name. If he hadn't felt the need to atone for that seven-week stint, none of the details would have dogged him later on.

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One other note on Asher, in the above link at Vanity Fair..

He later founded Database Technologies (DBT), which later was the source of the ex-felon database in the Spring of 2000, that enabled Jeb Bush and Katherine Harris to purge thousands of innocent people illegally from the voting rolls in advance of Election 2000.

DBT was absorbed later in 2000 by ChoicePoint.


And we know how THAT turned out.


More from
Vanity Fair, December 2004

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At first, 13 states signed on. Then one after another began dropping out. The A.C.L.U.'s drumbeating scared off some states, such as Utah. Prospective costs were also a concern. The campaign was hardly helped by a damning story on Asher in August 2003 in the St. Petersburg Times. A reporter named Lucy Morgan had attended the retirement party of longtime F.D.L.E. director James T. "Tim" Moore and was intrigued by the beefy guy whom Moore referred to as his best friend. "He was the only civilian there," Morgan recalls of Asher. "I wondered: who is he?" Curiosity led her to the F.D.L.E.'s original investigation of Asher's druggie past. "I had the feeling a lot of people at F.D.L.E. were surprised to hear about the investigation," says Morgan, "and that a lot of people on the board of Seisint didn't know about it, either."

John Walsh, for one, waved away the story as old news. "I know all the bullshit about Hank," he says. "All that was cool in those days. Jimmy Buffett bragged about it." What matters, says Walsh, is that Asher has lived up to his philosophy: "Doing well by doing good." Former New York mayor Rudy Giuliani rallied, too. "It seems to me that what Hank has been doing for some time is in essence to make up for some of the mistakes he may have made," Giuliani calls in to say from the Republican campaign trail. "Those mistakes are way behind him."

Yet the damage was done. That August, Asher resigned—under pressure—from Seisint's board and put his stock in a blind trust. Even so, eight states in all have since withdrawn from the MATRIX pilot program; the ones that remain are Florida, Pennsylvania, Ohio, Michigan, and Connecticut. Whether or not the states continue after the pilot year depends on whether they want to ante up the cost of subscribing on their own: the average cost per state is more than $l million a year.

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Interesting that the last few states left in the MATRIX database in late 2004 included particular states that had suspicious voting irregularities that have been now heavily documented. And by the end of 2004, MATRIX was dead.



More intriguing details on Asher:


FDLE will tap into multistate terrorism data link

By LUCY MORGAN
September 16, 2003

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A summary of a background investigation attached to the letter noted that Asher was involved in drug smuggling in the 1980s and later worked to help famed attorney F. Lee Bailey catch smugglers working out of Great Harbor, Bahamas, where Asher and Bailey lived.

The report also raised questions about Asher's alleged involvement in a plot to assassinate former Nicaraguan president Daniel Ortega.

"This is the most problematic of the issues and cannot be corroborated," the report noted. Asher told investigators he was approached by a former business associate and asked to help free "contract" government employees imprisoned in Nicaragua. Asher told investigators he withdrew after he was told they might have to kill some people.

Investigators say government sources did not confirm Asher's version of events, and the former associate is apparently dead.

Investigators said they also looked at some "suspicious financial transactions" but found no criminal or suspicious conduct. They also found no evidence to support a Broward County deputy's allegation that Asher was selling investigative information to drug smugglers in 1995.

The inquiry into Asher's background was terminated when he resigned from the company's board Aug. 29, the report noted. The complete background report on Asher and Seisint was not immediately released but will be available later this week, according to FDLE officials.

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Exclusive: Another Friend of Giuliani's Embroiled in Sheriff’s Criminal Case

By RICHARD ESPOSITO
December 4, 2007

When Hank Asher reached into the bag and pulled out the two $15,000 gold Cartier watches, the holiday crowd at Carmine's restaurant on 44th Street in Manhattan noticed, patrons recalled. Later, so did the U.S. attorney in Orange County, Calif., and soon yet another of Rudy Giuliani's business partners was embroiled in a bribery case.

Asher, identified by the initials H.A. in Overt Act 59 of a federal grand jury indictment against Orange County sheriff Michael Carona, had handed the diamond-encrusted Cartier baubles to the wives of the sheriff and his deputy, and with that, assured himself a place in a federal indictment that was looming.

Asher is not charged with any crime in the indictment. But his expensive gifts are clearly part of the corruption investigation.

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Since 2005, he has been Giuliani's partner along with the Mayo Clinic in Jari Research, a business set on finding a bone marrow cancer cure and making a profit.

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Asher's friends span the spectrum from Rudy Giuliani to Jesse Jackson and F. Lee Bailey. His business supporters have included Giuliani, Vice President Dick Cheney, and former Homeland Security Secretary Tom Ridge.

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Just add all of this to the pile.

[marmar]

1. G9u11ni would continue the tradition of Repug corruption if elected.....

.... And he brags about busting up the mob as a prosecutor!?! He is Dirrrty.