Is Trump’s $915 Million Tax Loss Connected to an Exotic Tax Shelter?

293015Guest Post by Robert J. Lord

The news is out about Donald Trump’s $915 million of tax losses.

The real question is whether those losses were real economic losses, or just a tax artifice created by a clever planner.

Real estate developers like Trump benefit tax-wise from provisions that allow them to claim losses attributable to borrowed money. But those provisions are not a complete giveaway if the borrowing ultimately is repaid.

If the borrowing is not repaid, as we know to be the case of Trump’s casino debt, the tax law generally requires the person whose debt is forgiven to recognize income, which typically erases the tax benefit of those earlier losses. Even in those situations where debt forgiveness does not result in income, the borrower’s tax attributes are reduced by the amount of debt forgiven, and unused losses are at the top of the list of those tax attributes to be trimmed.

Could Trump have figured out how to have his cake and eat it too – that is, keep his losses for tax purposes, even while being excused from having to repay the borrowed money on which those losses were based? Yes, it is possible!

One possibility is that Trump’s lenders agreed not to expressly forgive Trump’s debt, but instead to sell their rights as lender for pennies on the dollar to an individual or entity close to Trump, such that it would never be enforced. This strategy is referred to as “parking” the debt. Some tax professionals like John Hempton at Bronte Capital and commentators like Josh Marshall at TPM have speculated this is the artifice Trump and his advisors engineered to preserve Trump’s huge losses and thus shelter close to a billion of future income from tax.

Does the tax law permit the parking of debt that effectively has been forgiven? Certainly not by design. If Trump parked the debt with a close relative, the tax code would have treated it as if the debt was forgiven.

Trump could have parked the debt with someone not so closely related or with a friend, but not if had an agreement that said person would not enforce the debt. Which means he’d be at severe risk, as the person could turn on him and enforce the debt. That would have been almost a billion dollar risk. It is hard to imagine Trump, his accountants and attorneys permitting that.

Could Trump have parked the debt with a corporation, trust or partnership he controlled? In a word, yes. Congress tried to prevent debtors from circumventing the law this way as well, but they inadvertently created a small crack in the law, which Trump just may have been able to squeeze through.

The tax code expressly identifies corporations, partnerships and trusts deemed too close to a debtor to purchase his debt without causing the debt to be deemed forgiven for tax purposes. Those rules were well written. After they were written, however, and not long before Trump faced his financial difficulties, Congress created a new type of entity for tax purposes only, the “real estate mortgage investment conduit,” or REMIC. Those rules state, in no uncertain terms, that certain partnerships, corporations and trusts become something else for tax purposes. They are expressly NOT to be treated as partnerships, corporations or trusts. Thus, unwittingly, Congress created a gaping yet little noticed hole in the rules that prevent parking debt with a controlled corporation, trust or partnership.

And Trump may have seized on Congress’ mistake.

The REMIC rules were enacted in 1986 to facilitate investment in mortgage-backed securities (yes, those securities that crashed the economy in 2008). A REMIC is a partnership, corporation or trust under the law of the state in which it is formed (usually, Delaware) that holds almost exclusively interests in mortgage debt, and satisfies a few additional statutory requirements related to the type of ownership interests (for example, corporate stock, partnership interests, or beneficial interests in a trust) it issues.

Congress anticipated that REMICs would hold entire pools of mortgage interests, but never specified a minimum number, which means a REMIC might hold only one mortgage – for example, the mortgage on a Trump casino – and still qualify. Or it could be multiple similar obligations.

A few clever tax lawyers realized that by qualifying a partnership, corporation or trust as a bastardized form of REMIC, they could circumvent the rules that prevent the parking of debt with a controlled entity to avoid debt forgiveness income.

Trump’s situation quite clearly lent itself to this exotic strategy. If he used a REMIC he controlled to purchase the mortgage debt on one or more of his casinos (and/or other properties) at a deep discount, the rules that prevent debt parking would not have applied to him.

The bottom line: Trump indeed could have used a debt parking strategy to preserve close to a billion dollars in losses for tax purposes even though he avoided the economic loss on which those tax losses were based.

Did Trump employ this strategy? Nobody knows yet, but it would explain why those losses still showed up on his tax return in 1995 and how he gamed the system for an enormous tax windfall.

The secretive and shady nature of whatever avoidance scheme Trump has used, which would clearly be on the edge of legality, even if putatively legal as Trump claims, would also very easily explain why Trump steadfastly refuses to make public any more of his tax return information.

It is also exactly why the public is entitled to see his convoluted machinations and judge for themselves his honesty. And, remember, all statutes of limitation, both criminal and civil, have long ago expired as to the 1995 and surrounding years tax returns. There is no legitimate reason whatsoever Trump cannot release them. Other than fear that what he is hiding is exposed.

Robert J. Lord, a tax lawyer and former Congressional candidate, is an associate fellow at the Institute for Policy Studies. Bob previously served as an adjunct faculty member at the Arizona State University School of Law. Bob’s work focuses on the relationship of tax law to inequality. He contributes to both the Inequality.org website and to OtherWords, the Institute’s national syndicated editorial service. Bob also is a staff member at Blog For Arizona, the leading political blog in Arizona.

Trump Charity A Continuing Fraud On The People Of New York

scammer419One of the items of breaking news (no, really!) over the last 24 hours is the cease and desist order issued by the New York Attorney General’s Office to Donald Trump’s vaunted “charity”. The full text of the official letter can be found here.

The New York Times described it thusly:

The office of New York Attorney General Eric T. Schneiderman has issued a “notice of violation” to Donald J. Trump’s foundation, ordering it to immediately stop soliciting charitable donations in New York.

The letter, which was sent on Friday and released on Monday morning by Mr. Schneiderman’s office, said its charities bureau had determined that the Donald J. Trump Foundation had been fund-raising in New York this year when it was not registered to do so under state law.

“The Trump Foundation must immediately cease soliciting contributions or engaging in any other fund-raising activities in New York,” wrote James Sheehan, the chief of the charities bureau.

I want to focus on one particular clause in the letter however. The part identifying the “fraud”. To wit:

“The failure immediately to discontinue solicitation and to file information and reports required under Article 7-A with the Charities Bureau shall be deemed to be a continuing fraud upon the people of the State of New York.”

Now, in fairness, that is likely boilerplate/template language for such a cease and desist letter in New York, but that makes it no less true. What has occurred is that the Donald J. Trump Foundation, by not properly registering and being accountable for its activities, has been perpetrating a fraud on the People of the State of New York.

A state government is entitled to regulate, oversee and audit such activity occurring within its borders. As appears to be a pattern with Mr. Trump, he and his organization seemed to think they were simply above such common regulation. The willful non-compliance itself is a fraud, the size of the fraud perpetrated can only further be determined via full registration and full accounting for the multiple years of non-compliant activity the “charity” has engaged in.

There has been a fraud under the statutory and regulatory framework of the State of New York, we are only yet to ascertain the relative scope of it yet. And given the dogged reportage of David Fahrenthold of the Washington Post, which depicts rampant self serving and dealing by Trump as to personal debts via his charity, there is every reason to believe there are very serious issues to be dealt with.

But the ability of the NY Attorney General’s Office to actually deal with these questions depends on the prompt registration and disclosure by Trump of his offending and illegal charity.

Trump and his ill begotten “charity” have 15 days to comply with registration and disclosure. What do you think the odds are he will actually comply in good faith instead of hiding behind some bogus baloney, or submitting patently non-responsive filings, until after the election is over? I’d rate the odds at 100%.

The same odds that exist for Trump turning over his tax returns. Even the one from 1995, that has been beyond the statute of any limitation, whether criminal or civil, for over 15 years.

The Questions That Should Be Being Asked About Trump’s Tax Returns

watch-trumps-tax-evasion[Editor’s Note – this is a guest post by a friend of ours here at the Emptywheel Blog, Bob Lord. Bob is a longtime tax attorney with some very salient thoughts on Trump’s taxes, and lack of production thereof]

By Robert J. Lord

A lot has been said about Trump’s refusal to make his tax returns public. But despite the volume of commentary, it’s not clear the right questions even are being asked.

Trump claims he can’t release his returns because he’s under audit. At some level, that’s a legitimate concern. It would hardly be fair if thousands of tax professionals who oppose Trump politically helped the IRS by publishing their own analyses of the returns. Ultimately, however, it’s a phony excuse.

But rather than challenge the logic behind Trump’s refusal to release returns, a series of questions should be asked:

First, what tax years are under audit? Does it go back beyond 2012? If not, can the 2011 return be released? After all, the statute of limitations on the audit of that year has passed, so there’s no exposure to Trump by releasing that return. If not 2011, how about 2010?

Second, why haven’t the audit notices been released? An audit notice is a short, generic letter from the IRS stating that a taxpayer’s return has been selected for examination. There’s nothing so sensitive in such a generic notice that it could not be made public. At this point, Trump has not even offered up this most basic evidence that he is really even under audit. Why hasn’t proof been demanded?

Third, for the tax returns that are under audit, why can’t the first two pages be released? After all, those first two pages simultaneously contain the information most relevant to the public about a presidential candidate and contain no information that reveals the issues under audit. Although an audit ultimately impacts the numbers that appear on the first two pages of the return, it’s the schedules and other information that the IRS analyzes in an audit. For example, the first page of Trump’s return states the income or loss he received from partnerships and real estate investments, but it’s a schedule attached to the return, and the returns of the partnerships in which Trump is a partner, that contain the information the IRS would scrutinize in an audit.

Fourth, if for whatever reason the first two pages of the returns can’t be released, could Trump at least release five numbers from each of his returns: his gross income, his adjusted gross income, his taxable income, his self-employment tax liability, and his income tax liability? If not, then why not?

Fifth, is the sensitivity of Trump’s IRS audit the only reason behind his refusal to release the returns? Is Trump also under audit by any other tax agency, such as New York State’s Department of Revenue?

These questions would force Trump to take one of two approaches: Either continue to evade or allow the exposure of an uncomfortable (and intuitively obvious) reality – that the sensitivity of his audit is not the real reason for his refusal to release his returns. In all likelihood, he’d take the first approach, probably claiming that his tax advisors have told him not to release any information publicly. But, again, that cannot explain his refusal to release returns up to 2011, for which the statute of limitations have all expired.

What is the real reason Trump does not want to release the returns, even the first two pages? It could be that there’s some embarrassing piece of information in there somewhere and Trump learned from Romney’s refusal to go beyond a limited release of his returns that eventually people forget about a candidate’s refusal to come clean. More likely, however, the problem he’s facing is his own lack of credibility. The tax return of a real estate magnate like Trump paints a very distorted picture. Income will vary wildly from one year to the next. Important items might be buried in the return of a partnership or corporation that can’t be released because of minority partners or shareholders. Taxpayers in Trump’s position tend to bunch their charitable contributions, making them in the years they provide the most tax benefit. Unfortunately for Trump, that practice could make him appear incredibly tight-fisted if his returns over too short a period are seen in isolation.

And that’s where Trump could be trapped by his own lack of credibility. It may well be that there’s a perfectly reasonable explanation for whatever Trump would prefer not to be out there for public comment. Trump’s problem is that if the explanation comes from him, nobody will believe it. And he knows it.

At a minimum, however, the above critical questions must be asked. Even if Trump has to explain a few items on his returns, that is no greater fear or burden than every other previous Presidential candidate has faced. Certainly Trump may have varied financial interests, including charitable trusts. But so have other candidates before, including Hillary Clinton this election, and all have engaged in public transparency but for Trump.

Hopefully the press, including the debate moderators, will force Mr. Trump to answer these basic questions.

Robert J. Lord, a tax lawyer and former Congressional candidate, is an associate fellow at the Institute for Policy Studies. Bob previously served as an adjunct faculty member at the Arizona State University School of Law. Bob’s work focuses on the relationship of tax law to inequality. He contributes to both the Inequality.org website and to OtherWords, the Institute’s national syndicated editorial service. Bob also is a staff member at Blog For Arizona, the leading political blog in Arizona.

9/11: A Story of Attacks, Horror, Victims, Heroes and Jingoistic Shame

screen-shot-2016-09-11-at-2-54-38-amSeptember 11, 2001 is now 15 years in the mirror of life. Like the two Kennedy assassinations, the Moonshot and a few other events in life, it is one of those “yeah I remember where I was when…” moments. Personally, being on west coast time, I was just waking up thinking all I had was a normal morning court calendar. When my wife, who gets up far earlier than I, shouted at me to rub out the cobwebs and watch the TV because something was seriously wrong in New York City. She was right. It was a hell of a day, one of unspeakable tragedy and indescribable heroism. It was truly all there in one compact day, unlike any other, save maybe December 7, 1941.

2,996 people lost their lives, and their families and history were forever altered in the course of hours on an otherwise clear and beautiful day in Manhattan. Most were simply innocent victims, but many were the epitome of heroes who charged into a hellscape to try to salvage any life they could. There were other heroes that altered their lives in response, and either died or were forever changed as a result. One was a friend of mine from South Tempe, Pat Tillman.

No one can speak for Pat Tillman, and, save for his family, those who claim to only prove they never met the man. All I can say is, I wish he were here today. The one thing that is certain is he would not give the prepackaged trite partisan reaches you are likely to hear today. It would be unfiltered truth. Which the US did not get from its leaders after September 11, 2001, and is still missing today.

Instead of rallying and solidifying the oneness of the American citizenry that was extant immediately after September 11, 2001, the Bush/Cheney Administration and GOP told us to go shopping and that we needed to invade Iraq, who had nothing whatsoever to do with 9/11. It was a fools, if not devil’s, errand and a move that threw away an opportunity for greatness from the country and exploited it in favor of war crimes and raw political power expansion and consolidation.

Instead of gelling the United States to make ourselves better as the “Greatest Generation” did sixty years before, America was wholesale sold a bill of goods by a determined group of unreformed and craven Neo-Con war criminals left over from the Vietnam era, and we were led down the path to a war of aggression that was an unmitigated disaster we have not only not recovered from today, but are still compounding.

The 2000’s will prove to be a decade of American shame when history is written decades from now. Not from the attacks, but from our craven response thereto. So, pardon me if I join Colin Kaepernick and choose not to join, every Sunday, just because the Madison Avenue revenue generating NFL of Roger Goodell cravenly exploits it, the jingoistic bullshit of rote dedication to a racist National Anthem. Also, too, shame on opportunistic and Constitutionally ignorant whiny police unions who scold free speech and threaten to abandon their jobs in the face of it.

powell_un_anthraxBut that is all over now surely. Taking the United States, nee the world, to a forever war on the wings of a craven lie is universally recognized, condemned and scorned, right?

No. The Neo-Cons are unrepentant and still trying to advance themselves on the lie that their once and forever war justifies more than their prosecution and conviction in The Hague. Here is a belligerent and unrepentant Dick Cheney passing the torch of evil to his spawn Liz Cheney in the august pages of the Wall Street Journal:

We are no longer interrogating terrorists in part because we are no longer capturing terrorists. Since taking office, the president has recklessly pursued his objective of closing the detention facility at Guantanamo by releasing current detainees—regardless of the likelihood they will return to the field of battle against us. Until recently, the head of recruitment for ISIS in Afghanistan and Pakistan was a former Guantanamo detainee, as is one of al Qaeda’s most senior leaders in the Arabian Peninsula.

As he released terrorists to return to the field of battle, Mr. Obama was simultaneously withdrawing American forces from Iraq and Afghanistan. He calls this policy “ending wars.” Most reasonable people recognize this approach as losing wars.

Times may change, but the bottomless pit of Cheney lies and evil do not. As Charlie Savage pointed out on Twitter, the two terrorists the Cheneys refer to were actually released back to the “field of battle” by Bush and Cheney, not Obama. Was Obama involved in the story? Yes, he would be the one who actually tracked them down and killed them.

And then there is the failure to learn the lessons of the failed torture regime Bush and Cheney instituted as the hallmark of the “War on Terror”. Our friend, and former colleague, Spencer Ackerman has a must read three part series over the last three days in The Guardian (Part One, Part Two and Part Three) detailing how the CIA rolled the Obama Administration and prevented any of the necessary exposure, accountability and reform that was desperately needed in the aftermath of the torture regime and war of aggression in Iraq. It will take a while, but read all three parts. It is exasperating and maddening. It is also journalism at its finest.

And so, as we glide through the fifteenth anniversary of September 11, what are we left with from our response to the attacks? A destabilized world, an ingraining of hideous mistakes and a domestic scene more notable for jingoism and faux patriotism than dedication to the founding principles that America should stand for.

That is not what the real heroes, not only of 9/11 but the totality of American history, died to support and protect. In fact, it is an insult to their efforts and lives. If America wants to win the “War on Terror”, we need to get our heads out of our asses, quit listening to the neocons, war mongers, and military industrial complex Dwight Eisenhower warned us about, and act intelligently. This requires a cessation of adherence to jingoistic and inane propaganda and thought, and a focus on the principles we are supposed to stand for.

Wherein Mose Allison Presaged The Blight Of The Donald Trump Mouth

One of my favorite artists of all time, going back decades, is Mose Allison.

Turns out Mose wrote a song about Donald J. Trump decades before the intellectual and political blight actually arrived. Mose always was way ahead of his time.

Trump is a loudmouth, say anything, to anyone, at any time, that, first, makes him feel good, and, second, that might help himself.

In short, the ultimate clinically narcissistic jackhole. I doubt even Mose Allison figured how much his words might one day describe a blight on the American citizenry, if not humanity. Like in the form of Donald J. Trump.

But, here it is in it’s total prescient glory:

Sittin here and yakkin right in my face
You comin’ on exactly like you own the place
You know if silence was golden
You couldn’t raise a dime
Because your mind is on vacation and your mouth is workin’ overtime

You quotin’ figures and droppin’ names
You tellin’ stories and playing games
You’re overlaughin’ when things ain’t funny
You tryin’ to sound like the big money
You know if talk was criminal
You’d lead a life of crime
Because your mind is on vacation and your mouth is workin’ overtime

You know that life is short
Talk is cheap
Don’t be makin’ promises that you can’t keep
You don’t like this little song I’m singin’
Just grin and bear it
All I can say is if the shoe fits wear it
If you must keep talkin
Please try to make it rhyme
Because your mind is on vacation and your mouth is workin’ overtime.

So, sentient voters can vote their own conscience, and should. I can only hope they don’t do so in a manner that leads to the election of the Trumphstag.

Seriously, Americans are smarter than that, right?

Right??

Breaking: Russians Claim They’ve Found Extraterrestrial Life to Tamper with Our Elections

Russians secretly found what might be a sign of life coming from a star 95 light years away and people are in a tizzy.

An international team of scientists from the Search for Extraterrestrial Intelligence (SETI) is investigating mysterious signal spikes emitting from a 6.3-billion-year-old star in the constellation Hercules—95 light years away from Earth. The implications are extraordinary and point to the possibility of a civilization far more advanced than our own.

The unusual signal was originally detected on May 15, 2015, by the Russian Academy of Science-operated RATAN-600 radio telescope in Zelenchukskaya, Russia, but was kept secret from the international community. Interstellar space reporter Paul Gilster broke the story after the researchers quietly circulated a paper announcing the detection of “a strong signal in the direction of HD164595.”

It turns out, however, that the story got way overhyped.

“No one is claiming that this is the work of an extraterrestrial civilization, but it is certainly worth further study,” wrote Paul Glister, who covers deep space exploration on the website Centauri Dreams. He seems to have missed headlines like “Alien Hunters Spot Freaky Radio Signal Coming From Nearby Star,” “Is Earth Being Contacted by ALIENS? Mystery Radio Signals Come From a Sun-like Star” and “SETI Investigating Mysterious, Extraterrestrial Signal From Deep Space Star System.”

[snip]

“God knows who or what broadcasts at 11 GHz, and it would not be out of the question that some sort of bursting communication is done between ground stations and satellites,” he told Ars Technica, explaining that the signal was observed in the radio spectrum used by the military. “I would follow it if I were the astronomers, but I would also not hype the fact that it may be at SETI signal given the significant chance it could be something military.”

In other words, there’s a good chance the signal is the product of terrestrial activity rather than a missive crafted by extraterrestrial life on a distant exoplanet. For those who prefer a different outcome, there are plenty of movies that can offer more thrilling narratives.

So in the spirit of the silly season that our election has become, I’m going to go one better, taking the word “Russia” and some very thin evidence and declare this an election year plot. Everything else that has thin evidence and the word Russia is an election year plot, after all.

Consider the latest panic, caused by someone leaking Michael Isikoff an FBI alert on two attacks on voter files that took place this summer. Isikoff wasted no time in finding a cyber contractor willing to sow panic about Russians stealing the election.

The FBI has uncovered evidence that foreign hackers penetrated two state election databases in recent weeks, prompting the bureau to warn election officials across the country to take new steps to enhance the security of their computer systems, according to federal and state law enforcement officials.

The FBI warning, contained in a “flash” alert from the FBI’s Cyber Division, a copy of which was obtained by Yahoo News, comes amid heightened concerns among U.S. intelligence officials about the possibility of cyberintrusions, potentially by Russian state-sponsored hackers, aimed at disrupting the November elections.

[snip]

“This is a big deal,” said Rich Barger, chief intelligence officer for ThreatConnect, a cybersecurity firm, who reviewed the FBI alert at the request of Yahoo News. “Two state election boards have been popped, and data has been taken. This certainly should be concerning to the common American voter.”

Barger noted that one of the IP addresses listed in the FBI alert has surfaced before in Russian criminal underground hacker forums. He also said the method of attack on one of the state election systems — including the types of tools used by the hackers to scan for vulnerabilities and exploit them — appears to resemble methods used in other suspected Russian state-sponsored cyberattacks, including one just this month on the World Anti-Doping Agency.

Ellen Nakashima claimed the FBI had stated “Russians” were behind the attack and then talked about how Russia (rather than journalists overhyping the story) might raise questions about the integrity of our elections.

Hackers targeted voter registration systems in Illinois and Arizona, and the FBI alerted Arizona officials in June that Russians were behind the assault on the election system in that state.

The bureau described the threat as “credible” and significant, “an eight on a scale of one to 10,” Matt Roberts, a spokesman for Arizona Secretary of State Michele Reagan (R), said Monday. As a result, Reagan shut down the state’s voter registration system for nearly a week.

It turned out that the hackers had not compromised the state system or even any county system. They had, however, stolen the username and password of a single election official in Gila County.

Roberts said FBI investigators did not specify whether the hackers were criminals or employed by the Russian government.

[snip]

Until now, countries such as Russia and China have shown little interest in voting systems in the United States. But experts said that if a foreign government gained the ability to tamper with voter data — for instance by deleting registration records — such a hack could cast doubt on the legitimacy of U.S. elections.

She also cites the same Barger fellow that Isikoff did who might make a buck off sowing fear.

Then Politico quoted an FBI guy and someone who works with state election officials (who are not on the normal circulation lists for these alerts) stating that an alert of a kind that often goes to other recipients but which because we’ve recently decided election systems are critical infrastructure is now going to election officials is unprecedented.

But some cyber experts said the FBI’s alert, first revealed by Yahoo News on Monday, could be a sign that investigators are worried that foreign actors are attempting a wide-scale digital onslaught.

A former lead agent in the FBI’s Cyber Division said the hackers’ use of a particular attack tool and the level of the FBI’s alert “more than likely means nation-state attackers.” The alert was coded “Amber,” designating messages with sensitive information that “should not be widely distributed and should not be made public,” the ex-official said.

One person who works with state election officials called the FBI’s memo “completely unprecedented.”

“There’s never been an alert like that before that we know of,” said the person, who requested anonymity to discuss sensitive intergovernmental conversations.

Multiple former officials and security researchers said the cyberattacks on Arizona’s and Illinois’ voter databases could be part of a suspected Russian attempt to meddle in the U.S. election, a campaign that has already included successful intrusions at major Democratic Party organizations and the selective leaking of documents embarrassing to Democrats. Hillary Clinton’s campaign has alleged that the digital attacks on her party are an effort by Russian President Vladimir Putin’s regime to sway the election to GOP nominee Donald Trump. Moscow has denied any involvement.

Then David Sanger used a logically flawed Harry Reid letter calling for an investigation to sow more panic about the election (question: why is publishing accurate DNC documents considered “propaganda”?).

It turns out the evidence from the voting records hacks in the FBI alert suggests the hacks involved common tools that could have been deployed by anyone, and the Russian services were just one of several included in the hack.

Those clued-in to the incidents already knew that SQL Injection was the likely cause of attack, as anyone familiar with the process could read between the lines when it came to the public statements.

The notion that attackers would use public VPS / VPN providers is also a common trick, so the actual identity of the attacker remains a mystery. Likewise, the use of common SQL Injection scanners isn’t a big shock either.

The interesting takeaway in all of this is that a somewhat sensitive memo was leaked to the press. The source of the leak remains unknown, but flash memos coded to any severity other than Green rarely wind-up in the public eye. Doing so almost certainly sees access to such information revoked in the future.

And yet, there is nothing overly sensitive about the IOCs contained in this memo. The public was already aware of the attacks, and those in the industry were certain that something like SQL Injection was a possible factor. All this does is prove their hunches correct.

As for the attribution, that’s mostly fluff and hype, often used to push an agenda. Those working in the trenches rarely care about the Who, they’re more interested inWhat and How, so they can fix things and get the business back to operational status.

And Motherboard notes that stealing voter data is sort of common.

On Monday, Yahoo reported the FBI had uncovered evidence that foreign hackers had breached two US state election databases earlier this month. The article, based on a document the FBI distributed to concerned parties, was heavily framed around other recent hacks which have generally been attributed to Russia, including the Democratic National Committee email dump.

The thing is, voter records are not some extra-special commodity that only elite, nation-sponsored hackers can get hold of. Instead, ordinary cybercriminals trade this sort of data, and some states make it pretty easy to obtain voter data through legal means anyway.

In December of last year, CSO Online reported that a database of some 191 million US voter records had been exposed online. They weren’t grabbed through hacking, per se: the dump was available to anyone who knew where to look, or was happy to just cycle through open databases sitting on the internet (which, incidentally, common cybercriminals are).

In other words, by all appearances there is no evidence to specifically tie these hacks even to Russian criminals, much less the Russian state. But the prior panic about the DNC hack led to a lower trigger for alerts on a specific kind of target, voter rolls, which in turn has fed the panic such that most news outlets have some kind of story suggesting this is a Russian plot to steal our election (by stealing 200K voter files?). It’s like finding Russian life on Mars based on the shadows you see in the sand.

It’s not the Russians who are raising questions about the voting integrity — beyond questions that have persistently been raised for 15 years which have already justifiably lowered confidence in our voting system. It is shitty reporting.

So I’m going to join in. These ETs 95 light years away? I’m positive they want to steal our election.

Eli Lake’s Portrayal of the CIA Director Campaign: Drones, Benghazi, and … ?

Eli Lake reports that John Brennan wants to stay on as CIA Director under President Hillary. That’s not surprising given that Brennan believes (as Lake notes) CIA Directors should get 10 year terms just like FBI Directors do.

I thought maybe Brennan wanted to stick around to make sure he gets credit for bettering Allen Dulles’ record for regime change (after all, it’s not clear how the regime change conducted while Brennan was at the White House gets counted in these things).

Apparently not. After laying out what he portrays as opposition from both the left and right (not that that stopped Brennan from being confirmed in 2013), Lake describes that Brennan might stay because he’s the architect of the drone war.

Brennan does have the benefit of understanding the intricacies of the U.S. drone war that expanded significantly under Obama. Indeed, he is one of the main authors of that policy, going back to his time at the White House during Obama’s first term.

There was a time when Obama endeavored to end that war by the time he left office. It’s now clear that Obama’s successor will inherit it. Brennan is hoping that if that successor is Clinton, she will also inherit the architect of the drone war that he and Obama can’t seem to end.

This, at a time when the Senate Intelligence Committee and Armed Services Committee still squabble over who should drive the drone war.

Lake describes Mike Morell’s case (someone Dianne Feinstein has lobbied against in the past) this way:

Morell in particular has been helpful to Clinton. In his memoir and in congressional testimony, he blamed the CIA and the White House for the talking points on the 2012 Benghazi attack that attributed an act of terror to a demonstration over an internet video. Clinton, of course, was secretary of state at the time, and Republicans have leveled most of their criticism of Benghazi at her.

Lake pretends that the stated role in Benghazi and unstated opposition from Feinstein based off Morell’s comments about the torture report wouldn’t sink his candidacy. Maybe that wouldn’t?

Which leaves Mike Vickers, about whom Lake only mentions Vickers’ history as “former CIA officer and undersecretary of defense for intelligence.” Thankfully, Vickers has made his own case, in a recent endorsement of Hillary. After Vickers recalls his own bipartisan history (largely running covert ops), he raises Hillary’s favorite alleged proof of her national security chops, when she advised Obama to launch the Osama bin Laden raid.

As a Green Beret, CIA operations officer and senior national security official, I have served under six presidents—four Republicans and two Democrats. The last was Barack Obama, and for four years in the White House Situation Room, I saw Secretary of State Hillary Clinton’s sound strategic judgment first-hand—on the Afghanistan surge, the campaign to dismantle and defeat core al Qaeda in Pakistan’s tribal region, the raid to kill Osama bin Laden, and on lethal support for the moderate Syrian opposition. Secretary Clinton has the temperament, national security experience and strategic judgment to be an outstanding commander in chief. Donald Trump does not. I’m with her.

Vickers then ends his “endorsement” by confidently asserting we need to be more hawkish than we currently are.

To be sure, we will need more aggressive counterterrorism strategies, stronger support for the Syrian opposition as the only plausible counterweight to authoritarianism and extremism within Syria, more effective counters to Iranian and Russian expansion, and better strategies for deterring and competing with China over the long term. But just as we needed an experienced and steady hand to guide us safely through the early years of the Cold War, we need an experienced and steady hand to guide us through the current challenges to American leadership and world order. Only one candidate in this presidential race can supply that.

There you have the race to be CIA Director under Hillary (at least as viewed through a Neocon lens): the current drone architect, Mr. Benghazi, or the guy whose enthusiasm for covert ops matches Hillary’s own.

What Price Victory?

Virtually the entire political class has now united to defeat Donald Trump, with Morning Joe today staging a Michael Hayden appearance that served largely to allow Scarborough to tell the story of Trump asking three times in a foreign policy briefing why the US couldn’t use its nukes. As Dan Drezner pointed out on Twitter, Scarborough says the event happened months ago — when the primary was still going on — but has just now staged its telling.

Beating Donald Trump is important. He’s a racist who aims to win by promising white working class people they can resume persecuting people of color again, and he is dangerously inconsistent. That said, he does want to spend lots on infrastructure and protect workers from the ravages of globalization, something often forgotten in depictions of him as entirely policy free.

But the transpartisan obsession with beating Trump has largely applauded two developments that, for liberals, for democrats, for those who believe in peace, for progressives, should be a worry.

First, the Neocon establishment has come out in enthusiastic support for Clinton, with ideologue Eliot Cohen orchestrating serial efforts (one that even includes John Yoo!!) to oppose Trump. They point to Trump’s erratic nature and more recently the theories of Putin’s influence. They do so even in the face of a report that Paul Manafort, through whom any Putin influence would be managed, is checking out.

I exchanged messages Tuesday evening with a longtime ally of Trump campaign manager Paul Manafort, whom I asked about who was calling the shots in the campaign. The response indicated that Manafort, a veteran of Republican politics brought in this spring for the transition from primaries to the general election, has lost control over his candidate.

“Manafort not challenging (Trump) anymore,” Manafort’s ally wrote. “Mailing it in. Staff suicidal.”

I’m getting whiplash following the Manchurian Trump stories. Maybe the ones suggesting Bill Clinton was behind the Trump run are the true ones after all.

And even while the focus has been on Russia’s alleged influence with Trump, there has been no focus on Hillary’s unquestioning support of Saudi Arabia (the country that had ties to 9/11) and Israel. Or on Hillary’s equally troubling policy proposals, such as starting a No Fly Zone over Russian planes.  As Will Bunch noted in a great column, Democrats have become the party that shuns people who chant No More War.

The delegates didn’t hear from an Andrew Bacevich or the equivalent of James Madison, but they did get Panetta, who — as noted in this excellent analysis — has supported expanded war powers for the White House, failed to push for real accountability on Bush-era torture, and once suggested that “a 30-year war” will be needed against terrorism. Was it really rude for some of the DNC delegates to chant “no more war!” during Panetta’s speech? Or were some citizens desperately trying to be heard with a different point of view, in a nation so eager to squelch any public debate?

It should be a scandal that the United States drops bombs from flying death robots or our obscenely expensive military jets over countries like Libya, swaths of Africa, or Syria based only on a 15-year-old congressional resolution passed after an attack carried out mostly by Saudi Arabians loyal to a terrorist group that barely exists in 2016. But we’re afraid of any frank discussion of that, or the recent admission by the Obama administration that U.S. military actions in nations with which we’re not technically at war have killed 116 innocent civilians. That’s a number that experts find ridiculously low, by the way, and doesn’t as include as many as 85 Syrian civilians who were killed in late July by a U.S. airstrike — a story that was all but ignored in the media. Even if you strongly believe that such collateral damage is necessary to defeat international terrorism, chanting “USA! USA!” to support militarism is both jingoistic and crudely callous toward the dead.

Not only has Hillary gotten the support of the people who brought us into Iraq based on a lie (she told her own little stretchers to get us into Libya), but we’re now drowning out any voice for peace.

Then there’s the parade of heinous billionaires Hillary has rolled out, with Mark Cuban, Mike Bloomberg, and now Meg Whitman. NYT’s coverage of Whitman’s announcement emphasizes that Hillary has been courting Republican billionaires since before she finalized the nomination and that Hillary’s pick of the pro-TPP pro-Wall Street Tim Kaine is what sealed the deal for Whitman.

Whitman, who said she would remain a Republican, brings with her a considerable network of contributors, some of whom she said were open to giving to Mrs. Clinton. She said she was willing to campaign for Mrs. Clinton, said she would do her best to gather checks for her campaign and indicated she would personally give to both Mrs. Clinton and her affiliated “super PACs.” An aide to Ms. Whitman said she would personally give at least an amount in the “mid-six figures” to the Clinton effort.

While Democrats openly appealed at their convention last week to Republicans uneasy with Mr. Trump, Mrs. Clinton and her top supporters have been making a similar cross-party pitch in private since before the Democratic nomination fight even came to its conclusion.

[snip]

She said she had told Mrs. Clinton that she wanted to see the two parties’ conventions and assess the running mates that each nominee chose before making her decision. When Mrs. Clinton selected Senator Tim Kaine of Virginia, a consensus-oriented figure, “that was a positive for me,” Ms. Whitman said.

Whitman’s nod to Kaine is of particular concern to me, as Democrats downplayed his anti-choice and pro-business policies, at least in public, until after the convention. Now, if anything happens to Hillary (who has some dangerously unhinged enemies), we’ll basically have a moderate Republican running the country.

It’s not just that Hillary has secretly been courting oligarchs since before she cemented the nomination. It’s that her post-convention politicking has focused on it, as if the approval of oligarchs is what it will take to win in midwest swing states.

The guy who will likely become Majority Leader is even more aggressively pursuing typical Republican voters (though this view — admittedly filtered through the potentially inaccurate National Review — has some huge logical contradictions, not to mention an odd idea of what it would take for Democrats to continue to win Illinois).

“No guarantees, there never are, but the odds are more like than not that we will take back the Senate,” Sen. Chuck Schumer said at a forum sponsored by the Washington Post Thursday afternoon. Schumer will be the next majority or minority leader of the Senate Democrats, depending upon how November unfolds. He suggested that the electorate’s sense of economic gloom was actually working to his party’s advantage: “The electorate is moving in a more Democratic direction. When middle class incomes decline, people tend to move in a more progressive direction.”

Schumer’s optimism is driven more by national demographics than by the specific traits of his candidates. He contends that Millennials, or voters aged 18 to 35, will be the largest age group voting in this year’s electorate, even if they don’t turn out in massive numbers.

“The number one factor in whether we retake the Senate is whether Hillary Clinton does well, and I think she’s going to do really well,” Schumer says of his former fellow New York senator. He notes that Senate Majority Leader Mitch McConnell urged Senate Republicans in difficult races to localize their elections, rather than get too tied to Trump’s positions and comments and scoffs, “Sorry, Mitch, this is a national election if there ever was one.”

At least publicly, Schumer has no worries about his party’s dwindling fortunes among working-class white voters. “For every blue-collar Democrat we lose in western Pennsylvania, we will pick up two moderate Republicans in the suburbs in Philadelphia, and you can repeat that in Ohio and Illinois and Wisconsin.”

Democrats, it appears, want to become the party of the Republican soccer mom, which may work well with the bellicose warmongering, but which seems to view economic malaise as an opportunity rather than a problem.

So yeah, by all means, let’s beat the orange crazy man.

But let’s also be cognizant of the more politically palatable craziness that gets embraced in the process.

Was “Computer Network” “Analytics Data Program” Hacked at Hillary HQ VAN or Something Else?

Several outlets have reported that Hillary’s campaign — or rather, a network the Hillary campaign uses — got hacked along with the DNC and DCCC, presumably by the same APT 28 group presumed to be Russia’s military intelligence GRU. But reports on this, coming after a day of equivocation about whether Hillary’s campaign had been hacked at all, are unclear.

Reuters explains hackers accessed an “analytics program server” for five days (though doesn’t provide a date for that access).

A Clinton campaign spokesman said in a statement late on Friday that an analytics data program maintained by the DNC and used by the campaign and a number of other entities “was accessed as part of the DNC hack.”

[snip]

Later, a campaign official said hackers had access to the analytics program’s server for approximately five days. The analytics data program is one of many systems the campaign accesses to conduct voter analysis, and does not include social security numbers or credit card numbers, the official said.

KTLA (working off a CNN feed, I think) described the target as a “dynamic voter database — with voter participation, voter contact information and voter files all campaign organizations use.”

A person familiar with the Clinton campaign program described it as essentially a dynamic voter database — with voter participation, voter contact information and voter files that all campaign organizations use. It’s a list — but a dynamic one with key voter data.

A Clinton aide said the hackers had access to the analytics program’s server for approximately five days. The analytics data program is among many systems accessed to conduct voter analysis. It does not include social security numbers or credit card numbers.

The aide noted further that according to the campaign’s outside cyber security expert, the hack of this analytics data program could not have resulted in access to Clinton campaign internal emails, voicemails, computers or other internal communications and documents. Those are completely independent systems.

Some, though not all, of those reports is based off this circumspect statement from Nick Merrill.

An analytics data program maintained by the DNC, and used by our campaign and a number of other entities, was accessed as part of the DNC hack. Our campaign computer system has been under review by outside cyber security experts. To date, they have found no evidence that our internal systems have been compromised.

Meanwhile, the FBI sources in these stories seem hesitant to definitively tie this hack to the others.

I raise all this because the KTLA description of the program sounds a lot like VAN, the voter management program that has already made the news several times this election year. VAN is dynamic and accessible to all Democratic campaigns so they can share data about voter participation, contacts, and enthusiasm for one or another candidate.

But if it were VAN it’d be of particular interest for two reasons. First, because a firewall between Hillary and Bernie’s campaigns went down in December, just as Bernie’s campaign finished up an utterly historic fundraising day. A few of Bernie’s staffers accessed some of Hillary’s data — they said to monitor the extent of the breach, which they claimed was the second time it had happened. Bernie sued the DNC over the insecurity of the VAN, but ultimately he ended up punishing several staffers.

In other words, by December, if not before, the DNC had warning that the VAN was unstable. If the hack was of VAN and if it was in any way associated with this time period — or if it was a response to DNC taking no action to force VAN to improve security — then it would be very damaging to the Democrats.

If this hack was of VAN, it would also be significant given that Guccifer 2’s technically bogus explanation of how “he” hacked the DNC claimed he got in through VAN.

How did you break into the DNC network? And are you still in?

These questions are also very popular. I’ve already said about the software vulnerabilities. The DNC had NGP VAN software installed on their system so I used the 0-day exploit and then deployed my backdoor. The DNC used Windows on their server, so it made my work much easier. I installed my Trojan like virus on their PCs. I just modified the platform that I bought on the hacking forums for about $1.5k.

I’ve been inside the network for pretty long time, so I downloaded a lot of files. I lost access after they rebooted the system on June 12. But after all, if they’ll carry on like this it won’t be a problem to get in again and again.

I’ve worked with VAN (albeit in a county party office) and I can’t think of a way it would be hooked up to more substantive computers (hmm–except perhaps within a computer and from there back up through a network). And the explanation appears bogus for a number of other reasons. But it would be interesting if Guccifer 2 had pointed to VAN weeks before the campaign decided to check whether VAN had been accessed (after having been proven to be unstable in the primary).

Finally, it would be interesting if it were VAN for one more reason: because after the December incident, Bernie moved off of VAN. Which means he has files protected from whatever the Russians or whoever else have been up to.

On Responsible Sourcing for DNC Hack Stories

For some reason Lawfare thinks it is interesting that the two Democratic members of the Gang of Four — who have apparently not figured out there’s a difference between the hack (allegedly done by Russia) and the dissemination (done by Wikileaks, which has different motivations) are calling for information on the DNC hack to be released.

The recent hack into the servers of the Democratic National Committee (DNC) and the subsequent release via WikiLeaks of a cache of 20,000 internal e-mails, demonstrated yet again the vulnerability of our institutions to cyber intrusion and exploitation.  In its timing, content, and manner of release, the email dissemination was clearly intended to undermine the Democratic Party and the presidential campaign of Secretary Hillary Clinton, and disrupt the Democratic Party’s convention in Philadelphia.

[snip]

Specifically, we ask that the Administration consider declassifying and releasing, subject to redactions to protect sources and methods, any Intelligence Community assessments regarding the incident, including any that might illuminate potential Russian motivations for what would be an unprecedented interference in a U.S. Presidential race, and why President Putin could potentially feel compelled to authorize such an operation, given the high likelihood of eventual attribution.

For some equally bizarre reason, WaPo thinks Devin Nunes’ claim — in the same breath as he claims Donald Trump’s repeated calls on Russia to release Hillary’s email were sarcastic — that there is “no evidence, absolutely no evidence” that Russia hacked the DNC to influence the election is credible.

Rep. Devin Nunes (R-Calif.), the chairman of the House Intelligence Committee, told The Washington Post in an interview Wednesday that speculation about Russian attempts to sway the presidential election is unfounded.

“There is no evidence, absolutely no evidence, that the Russians are trying to influence the U.S. election,” Nunes said, repeatedly swatting away the suggestion made by some Democrats that the Russians may be using their intelligence and hacking capabilities to boost Donald Trump’s chances.

“There is evidence that the Russians are actively trying to hack into the United States — but it’s not only the Russians doing that. The Russians and the Chinese have been all over our networks for many years.”

These are two obvious (because they’re on the record) examples of partisans using their access to classified information to try to boost or refute a narrative that the Hillary Clinton campaign has explicitly adopted: focusing on the alleged Russian source of the hack rather on the content of the things the hack shows.

Kudos to Richard Burr, who is facing a surprisingly tough reelection campaign, for being the one Gang of Four member not to get involved in the partisan bullshit on this.

There are plenty of people with no known interest in either seeing a Trump or a Clinton presidency that have some measure of expertise on this issue (this is the rare moment, for example, when I’m welcoming the fact that FBI agents are sieves for inappropriate leaks). So no outlet should be posting something that obviously primarily serves the narrative one or the other candidate wants to adopt on the DNC hack without a giant sign saying “look at what partisans have been instructed to say by the campaign.” That’s all the more true for positions, like the Gang of Four, that we’d prefer to be as little politicized as possible. Please don’t encourage those people to use their positions to serve a partisan narrative, I beg of you!

For the same reason I’m peeved that Harry Reid suggested the Intelligence Community give Trump fake intelligence briefings. Haven’t we learned our lesson about politicizing intelligence?

More generally, I think journalists should be especially careful at this point to make it clear whether their anonymous sources have a partisan dog in this fight, because zero of those people should be considered to be unbiased when they make claims about the DNC hack.

A very special case of that comes in stories like this, where Neocon ideologue Eliot Cohen, identified as Bush appointee, is quoted attacking Trump for suggesting Russia should leak anymore emails.

But now Republican-aligned foreign policy experts are also weighing in along similar lines.

“It’s appalling,” Dr. Eliot A. Cohen, who was counselor of the State Department during the second term of George W. Bush’s presidency, said to me today. “Calling on a foreign government to go after your opponent in an American election?”

Cohen recently organized an open letter from a range of GOP national security leaders that denounced Trump in harsh terms, arguing that Trump’s “own statements” indicate that “he would use the authority of his office to act in ways that make America less safe, and which would diminish our standing in the world.” The letter said: “As committed and loyal Republicans, we are unable to support a Party ticket with Mr. Trump at its head. We commit ourselves to working energetically to prevent the election of someone so utterly unfitted to the office.”

But this latest from Trump, by pushing the envelope once again, raises the question of whether other prominent Republicans are ever going to join in.

For instance, to my knowledge, top national security advisers to George W. Bush, such as Stephen Hadley and Condoleezza Rice (who was also secretary of state), have yet to comment on anything we’ve heard thus far from Trump. Also, there could theoretically come a point where figures like former Defense Secretary Donald Rumsfeld and possibly even Dubya and George H.W. Bush feel compelled to weigh in.

Meanwhile, senior Republican elected officials who have backed Trump continue to refrain from taking on his comments forcefully or directly. Some Republicans actually defended Trump’s comments today. Paul Ryan’s spokesman issued a statement saying this: “Russia is a global menace led by a devious thug. Putin should stay out of this election.”

I feel differently about Trump’s asinine comment than I do about attribution of the attack. I’m all in favor of Hillary’s campaign attacking Trump for it, and frankly Cohen is a far more credible person to do so than Jake Sullivan and Leon Panetta, who also launched such attacks yesterday, because as far as I know Cohen has not mishandled classified information like the other two have.

But I would prefer if, rather than IDing Cohen as one of the Republicans who signed a letter opposing Trump, Greg Sargent had IDed him as someone who has also spoken affirmatively for Hillary.

On foreign policy, Hillary Clinton is far better: She believes in the old consensus and will take tough lines on China and, increasingly, Russia. She does not hesitate to make the case for human rights as a key part of our foreign policy. True, under pressure from her own left wing, she has backtracked on the Trans-Pacific Partnership, a set of trade deals that supports American interests by creating a counterbalance to China and American values by protecting workers’ rights. But she might edge back toward supporting it, once in.

Admittedly, this was at a time when Cohen and others still hoped some Mike Bloomberg like savior would offer them a third choice; that was before Bloomberg gave a very prominent speech endorsing Hillary last night.

Here’s the thing. The Neocons (led by Robert Kagan, who’s wife got named as a target of Russian aggression in the Feinstein-Schiff letter) are functioning as surrogates for Hillary just like top Democrats are. They are, just like Democrats are, now scrambling to turn their endorsements into both policy and personnel wins. Therefore we should no more trust the independence of a pro-Hillary Neocon — even if he did work for George Bush — than we would trust the many Democrats who have used their power to help Hillary win this election. Progressives should be very wary about the promises Hillary has made to get the growing number of Neocons (and people like Bloomberg) to so aggressively endorse her. Because those endorsements will come with payback, just like union or superdelegate endorsements do.

In any case, it’s hard enough to tease out attribution for two separate hacks and the subsequent publication of the hacked data by Wikileaks. Relying on obviously self-interested people as sources only further obscures the process.

Update: The Grammar Police actually nagged me to fix “whose/who’s” error in the Kagan sentence. Fun!

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