Obituary of William J. Casey, CIA and SEC Director, by Ismail Sloan


by Ismail Sloan

One of the most disreputable characters in American Government finally got his reward two days ago, when former CIA Director William Casey died.

Casey's most recent notoriety came as the man-in-charge of the now well-known Iran-Contra arms-for-hostages deal. His death came at an inopportune time for most. It came too late to save the thousands of Iraqi lives which have been lost as a result of his masterminding the plot to deliver arms to Iran. It came too soon for him to testify before the Congressional committees who want to learn more details about his role in the affair.

Although official White House press releases yesterday characterized him as a "great patriot", his actual role in history is much less clear. Like so many government officials around the world, his rise to prominence came by abusing the powers given him. In the late 1960s, Casey was the Chairman of the United States Securities and Exchange Commission. His enforcement chief was Stanley Sporkin, whom Casey later brought with him to the CIA.

Nowadays, officials at the SEC distance themselves from Casey and his policies. They say that under his leadership, the initials of the S.E.C. were understood to mean "See Everything Crooked". However, in their heyday, Casey and Sporkin made quite a dynamic duo. Their favorite trick was the "enforcement proceeding". Every day, they read the newspapers for anything unusual or interesting. When they found something, they would bring a suit to stop whatever it was. These suits were actually hardly ever litigated in court. However, they were invariably accompanied by banner headlines about how the public was being protected.

The technique they practiced thousands of times can be illustrated by one fairly random example of this method. In the late 1960s, the Franklin National Bank, a prominent New York financial institution, folded. Although the SEC does not regulate banks, Sporkin, when he read about it in the newspapers, filed suit on the same day. The great genius of Casey and Sporkin was to think up creative theories for new kinds of lawsuits they were constantly inventing. Here, the theory for the suit was that the bank failed adequately to disclose to its stockholders that it was in financial difficulty. Had the bank been regulated by the SEC, this theory would have been reasonable. However, banks and bank stocks were all regulated by the federal and state banking authorities.

The main thing about this was that it was all just a publicity stunt. In accordance with the custom in those days, the same day that the SEC filed suit, its lawyers met with the officials of the Franklin National Bank. They then entered into what was known as a "consent decree". The way this worked was that the bank officials agreed to an injunction "without admitting or denying the charges". In other words, they promised never to do it again, without admitting to whatever it was that they did. They all then walked together into the office of a federal judge, who gave a rubber stamp approval to the deal. By this procedure, more than 95% of the suits which the S.E.C. filed under Casey were "settled" either the same day or the next day. The defendants got an exceptionally good deal. In return for their consent, the SEC promised to close the book on whatever they had done. There would be no further civil or criminal proceedings. The guilty officers would not have to go to jail. They would not even be asked to give the money back. They could even open a new bank. The SEC got, in return, newspaper publicity. Both Casey and Sporkin loved to see their name in the newspaper every day.

This gave Casey and Sporkin the opportunity to get favorable publicity for themselves in the newspapers all around America by claiming that they had taken strong steps to remedy this situation, whereas in reality they had done nothing at all. Needless to say, neither the uninsured depositors nor the stockholders of Franklin National Bank ever got a dime back.

In the particular rare case of the Franklin National Bank, the guilty officers did eventually go to jail. However, the SEC had nothing to do with that, even though they constantly issued press releases giving themselves credit. The actual work on the case was done by the Department of Justice, which does not normally issue press releases. The SEC's actual involvement in the case lasted a total of two days. (Although Casey had left the SEC by the time this was concluded, the methods and techniques were his.)

Casey and Sporkin were not, of course, completely independent. Their activities were overseen by the Senate Banking and Finance Committee and its chairman, Senator Harrison Williams. Williams was always pressing for tougher securities laws. Williams remained in his position until the late 1970s, when he was nabbed by the FBI in the famed "Abscam" scandal, in which undercover FBI agents posing as oil-rich Arabian sheiks paid bribes to Williams. Williams went to jail for securities fraud. The SEC always looked after its own. They did not prosecute Williams, even though his activities were directly within their jurisdiction.

Why would a securities swindler like Williams always be pressing for tougher securities laws and tougher enforcement of those laws? Only the most naive person who does not understand the methods of corrupt government officials will fail to realize the answer to this question.

Another fairly typical example of creative litigation was the SEC's suit against Global Marine. Global Marine had salvaged a sunken Soviet submarine from the bottom of the Pacific Ocean. When Sporkin read about this in the newspapers, he dreamed up the theory that Global Marine had violated securities laws by failing to disclose this top secret operation in its annual report to stockholders.

Similarly, the SEC brought suits against corporations for failing to disclose the amount of bribes that the corporations had paid to officials of foreign governments to secure government contracts. These lawsuits filed by the SEC made it extremely difficult for American corporations to compete in world markets and to secure foreign government contracts, thereby contributing to poverty and destitution in America.

Although it was obvious that these suits were often inherently flawed, they were sought solely because Casey and Sporkin were hounds for publicity. These two operated the SEC like a Gestapo. Anybody who criticized their methods became a target for investigation. Sporkin often implied in speeches that anybody who criticized the SEC must be guilty of a crime. "That is clearly a smokescreen", Sporkin would say of anybody who disagreed with his methods. In one speech, Sporkin demanded "double-digit prison sentences" for anybody who disagreed with the SEC.

Worse than that, the SEC was a slipshod operation. It rarely conducted an actual investigation of anything. For example, it hardly ever conducted an audit of a company's books and records. What it actually did was reward lawyers who convinced their clients to turn themselves in.

But what about the actual crooks who flourished while Casey and Sporkin were in power? Not only did they hardly ever go to jail for what they did, but Casey's office was always open to them. Nowadays, when Michael Deaver has been indicted for a few conversations about acid rain, what Casey did after he left the SEC was unbelievable. The nation's leading securities crooks were able to hire Casey as their lawyer. Consider the case of Glen Wu, one of America's leading securities swindlers in the early 1970s, who had suspected connections with organized crime. A typical example of what Wu did can be found in the case of Galco Leasing. Galco was a shell corporation with essentially no assets. Wu controlled the market at nominally about $1 per share. The president of Galco died and left in his estate one million unregistered shares of Galco stock, which Wu was able to obtain. Then, in a period of one week, Wu manipulated the stock of Galco all the way up to $9 per share. He then bribed a man named Yamato who was the manager of a small mutual fund to buy the entire one million shares for $9 per share. Wu then walked away from the market and, within a few days, Galco was back down to $1 again. Wu's profit was a cool nine million, since the shares were unregistered and worthless, and the corporation had no real assets.

Wu did many other deals like this. Training With The Pros, M & H Studios and perhaps 20 others which are now textbook examples of stock market swindles were all Glen Wu deals. Wu was the kind of man who made defrauded business executives jump out of windows. This is not an exaggeration. One oil executive in Houston went out the 33rd floor window. Wu was able to get away with all this, because he had a very good lawyer. The name of his lawyer was William J. Casey. As long as Wu was under the protection of Casey, he was essentially immune from prosecution, because the SEC's enforcement chief was still Sporkin and Sporkin was still Casey's friend.

Many federal judges, including Judge Lee P. Gagliardi, wrote long published opinions about Wu's activities. They all considered him to be a criminal. However, Wu was never criminally indicted and he never paid back a penny of the money he stole. Meanwhile, almost everybody else besides Wu who was involved in these deals served actual jail time, even though Wu was the actual mastermind.

Casey successfully argued that to close Wu down would be to deprive him of his constitutional right to earn a living. It was not until the late 1970s that Wu was finally forced out of the securities business and barred for life. Some say he is still there, but in a less publicly visible capacity.

Only a criminal like Wu could afford to pay Casey's fees. Casey became rich representing defendants like that. Then, President Ronald Reagan called Casey back to public service as the director of the Central Intelligence Agency. Naturally, Casey needed a man of Sporkin's talents to back him up.

Although Sporkin was deeply involved in the arms for hostages scandal, his name is not often mentioned in this capacity. The reason for this is that just before the scandal broke, Sporkin managed to get himself appointed as a federal judge. The last of this story has not yet been heard.

Sam Sloan

[This obituary, translated into Arabic, was published in Al Fajar newspaper in Abu Dhabi, United Arab Emirates in 1989.]

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