Former Deputy Director of the FBI McCabe Sues Government

By: Denise Simon | Founders Code

In September of 2017, a lawsuit was filed to obtain records under FOIA in a request to obtain documents regarding Andrew McCabe’s conflicts of interests.

Then in February of 2018, the Office of Inspector General issued a 39 page report complete with allegations relating to the former Deputy Director Andrew McCabe. The investigation included evidence of McCabe’s lying and failure to adhere to policies and practices regarding media contacts.

Since that time, McCabe turned to crowd-funding to pay for his legal fees as he pursues legal protection as well as a lawsuit against the FBI and the Department of Justice.

He has officially sued both. The complaint is found here.

A lawyer for fired former FBI Deputy Director Andrew McCabe is suing the FBI, the Justice Department and its inspector general for refusing to turn over documents related to McCabe’s termination.

McCabe, who worked at the FBI in various roles for more than 20 years, was dismissed only hours before his planned retirement in March, for what the Justice Department called a “lack of candor.”

The firing stripped McCabe and his family of their health care benefits and delayed his ability to collect a federal pension, which he otherwise would have been able to draw on his 50th birthday.

McCabe’s lawyer, David Snyder, maintains in a new lawsuit that the dismissal violated federal law and departed from rules and policies. But he said authorities have refused to turn over materials related to McCabe’s disciplinary process.

“Those requests have been denied by some of the same high-ranking officials who were involved in, or responsible for, the investigation, adjudication, and/or dismissal of Mr. McCabe,” the legal complaint said.

McCabe’s legal team at the Boies Schiller firm has sued to demand the information under the Freedom of Information Act. They’re arguing the documents could help them build a larger case against the Justice Department for wrongful termination and due process violations.

“We don’t create secret law in this country,” Snyder told NPR in an interview.

McCabe has been the subject of political attacks by President Trump and Republican supporters since the 2016 presidential campaign. McCabe’s wife, Jill, ran for the state legislature in Virginia as a Democrat and accepted campaign contributions via then-Gov. Terry McAuliffe, a longtime Clinton loyalist.

Jill McCabe lost her election and the FBI and Justice Department said she and Andrew observed the relevant ethics requirements, but Trump and allies called it an obvious conflict of interest.

Shortly after McCabe’s ouster at the FBI, Trump wrote on Twitter that it was a “great day for democracy.”

Word comes of McCabe’s legal case as the inspector general, Michael Horowitz, prepares to release a massive 500-odd page report on the FBI and Justice Department’s handling of the Hillary Clinton email investigation during the heart of the 2016 election.

McCabe, Comey, and former DoJ leaders including then-Attorney General Loretta Lynch have been under scrutiny in connection with that report, which is expected to become public on Thursday.

Meanwhile, McCabe’s conduct is also under review for possible criminal prosecution by the U.S. Attorney’s Office in Washington, D.C., which has already interviewed McCabe’s onetime boss, former FBI chief James Comey.

The IG concluded that McCabe misled investigators.

McCabe has denied any intentional wrongdoing. Instead, he said, any lapses in his memory or mistakes in his interviews with the IG and others were mistakes derived from the chaos inside the FBI under siege from President Trump and his allies.


Silicon Metropolis

By: Thomas Wigand | New Zeal

Can life imitate art? Well, a silent movie from over 90 years ago might exclaim a resounding “Yes!”  That movie is the classic Metropolis, that premiered in (Weimar) Germany in January, 1927 – widely considered to perhaps be the first science fiction movie, it is set in our present, the 21st century. In many ways it anticipated today’s titans of Silicon Valley, which is the thrust of this article – but first, as a necessary setup, a quick overview of the movie itself:

The political and social environment during which it was made had to have had some influence.  Berlin of the post-WWI period was marked by social debauchery (the movie Cabaret touches on this period), driven largely by economic and political upheaval arising from the loss of the war, the draconian terms of the Treaty of Versailles and resulting economic distress, and political interests working to exploit the situation to gain political control.  This was the era in which the National Socialists (Nazis) and Communists were tussling to determine who would come out on top.  The original ANTIFA arm of the Communists was but a few years away, as was Adolph Hitler’s election.  Outside of Germany, the industrial age and condition of workers had provided fodder for the utopian-peddling Communists to promise things such as “Peace, Land and Bread” to a desperate “proletariat” that could not know the dystopian reality that Communism would later inflict.  As such, many were likewise worried that the siren call of Communism could envelope the globe (which was not without reason, as this was a stated goal of Communists).

Seemingly lost to time, the “complete” version of Metropolis was assembled from a print found in Buenos Aires in 2008, and what the nearly complete original is now available (trailer HERE).  Intriguingly, the complete original was  never seen in the United States – the distributor here gutted it, in particular removing the Christian themes that are woven throughout.  Some of the better-preserved footage is startling – so sharp that if told that it was filmed in recent years on black and white stock, it would seem plausible.  Also startling is the effective use of light and shadow, and the special effects – today’s CGI cowboys could learn much from this nearly century old film!

The storyline involves a 21st century city called “Metropolis,” conceived and run by an industrial titan named “Joh Fredersen” – substitute “tech” for “industrial” and the personality type fits many of todays overlords of Silicon Valley. Fredersen’s headquarters is called the “New Tower of Babel”:

The New Tower of Babel — Joh Fredersen’s HQ (any resemblance to Facebook, Google or Twitter headquarters is strictly coincidental).

The “head” (thinkers) live a lavish lifestyle above, while deep underground workers (“hands”) operate a massive machinery operation that enables the city to run; theirs is an existence of dreariness and exhaustion, with no prospects for improvement for them or their children.  Meanwhile the elite above live well; and the really elite enjoy a debauched lifestyle as they frequent a Japanese-themed nightclub called “Yoshiwara” (which also happens to be the name of Tokyo’s red light district).  A “mad scientist” named “Rotwang” develops a “machine-man” (robot), which he then is able to make indistinguishable from a human being.  In this, his model is to bring back “Hel” – the deceased wife of Frederson – and this robot is sent out to mislead the workers and incite them to destroy Metropolis.

Rotwang: “So Joh Frederberg, Isn’t it worth the loss of a hand to have created the man of the future, the Machine-Man? … Give me another 24 hours — and no one, Joh Fredersen, no one will be able to tell a Machine-Man from a mortal!”

Which brings us to today’s Silicon Valley.  Increasingly the titans of tech simultaneously extol (and worry about the consequences of) advances in robotics and artificial intelligence, recognizing that over time many (likely most) human workers will be displaced – unemployed, and unemployable.  The Ted Talk brigade is proposing solutions – primarily a “Universal Basic Income”  (“UBI”) and it enabling folks to pursue self-actualization (recall Maslow’s hierarchy of needs) and start up new businesses, freed to pursue an entrepreneurial dream, or create art, or whatever the subsidized idle-time now makes possible.  Some are even peddling the notion that UBI can save the planet!  Let us say up front, that these “solutions” are self-serving for the tech-elite; and they will not work.

For years the neo-Marxist Progressives a/k/a Socialists (e.g., Bernie Sanders) have peddled “Medicare for All” and “Social Security for All” – essentially euphemisms for socializing health care and retirement funding; eliminating eligibility requirements or contribution requirements by making all citizens auto-covered by these programs.  This is, of course, consistent with Marxist dogma about “from each according to his ability, to each according to his need.” – with a twist.  Those without a “need” are covered, as this provides political cover, while the “ability to pay” will remain – we all get the “entitlement” and only some suffer the “ability to pay.”

UBI presents an expansion on this – essentially “welfare for all.”  The theory (that is peddled) goes something like this:  everyone will get a sum of money equivalent to what the government decides is sufficient to cover their basic needs (housing, food, medical, transportation) and perhaps a bit more.  So folks would be “freed” from having to work to meet their “basic” needs. Yeah, that’ll work out well.  We have millions on welfare already who are “freed” from work while having their basic needs covered – and yet our inner cities are not exactly hotbeds of entrepreneurialism or people otherwise pursuing and fulfilling Maslovian higher-order needs.

As an initial matter, how would UBI be financed?  By definition, the tens or hundreds of millions who’d be content to loll around while their basic needs are met won’t help contributing; meanwhile many (perhaps eventually a majority) of those who have a work ethic will be in forced idleness due to their replacement by technology.  The proponents (as usual) fall back on “the rich,” and some even propose increased taxes on the tech companies whose AI and robotics replace workers (a tax with a built-in cap, for if it was set too high the cost of a human worker would again become competitive). There ain’t gonna be enough money dot-com.

Also, if human beings are increasingly displaced by AI and robotics, from whence will come the customers?  Who will buy the products produced by robots (particularly if we get to the point that AI-powered robots are designing and building other robots)? How do you build and sustain an vibrant economy that increasingly excludes human beings – and won’t over time the overall economy shrink, thus rendering the UBI less tenable, and thus throwing economically displaced humans into ever-more dire circumstances?  Will not “income inequality” grow worse rather than better (don’t think for a minute that die-hard Progressives won’t still bewail that “injustice” even after UBI).

The titans of Silicon Valley are portraying themselves as “socially conscious” and “woke.” Hardly.  If media reports are to be believed, Jeff Bezos’ Amazon treats its human workers not unlike the sweatshop owners of lore (at least until they too are replaced by robots, which reports indicate is nigh).  Tech giants are anticipating a societal blowback, and so have been buying up escape abodes in places like New Zealand.  Their support of UBI – their peddling of a neo-Marxist concept – is cynically intended to relieve political pressure, to delay the reckoning, to buy time even as they expand their human-displacing technologies.

The “Machine-Man” — the recreated “Hel” — in the Yoshiwara resembling the Whore of Babylon atop the Seven Deadly Sins. After inciting the workers to destroy the city, she / it tells the privileged crowd at Yoshiwara: “Let’s all watch as the world goes to the devil.”


And out they go — party animals going out to watch the world go to the devil.

Silicon Valley, at least its upper level executives, are increasingly becoming like the privileged elite living above the masses, like those portrayed in Metropolis.  This also includes a debauched lifestyle reminiscent of MetropolisYoshiwara patrons, as well-described here. The “Ted Talk” brigade will stand before friendly audiences and present oh so logical and soothing prognostications of a coming tech-infused utopia – Utopia 2.0.  But this is not unlike the Communists mentioned above who peddled their Utopia 1.0.  The world got dystopia in v. 1.0; we should not assume on mere faith that Utopia 2.0 will have a different outcome.

This is not to advocate a Luddite-like resistance to technology, including AI and robotics. But it is very much to say that we should not passively accept the word of those who stand to reap even more billions from the path they propose; nor should we accept an industrial-age Marxist concept (UBI) as the solution when, at best, it would be but a temporary palliative.

Finally, in this article no disclosure was made regarding how Metropolis ends.  That will have to await your viewing of it in its entirety (and pondering the parallels to today that it may have predicted).

Mr. Wigand is the author of Communiqués From the Vast Right-Wing Conspiracywhich is available on Amazon in both print and Kindle versions.  Comments or questions for Mr. Wigand may be sent to: [email protected]— he will make every effort to personally respond to every email.


Fed Statement At 2:00

By: Kent Engelke | Capitol Securities

There is a small cadre of economists who believe the economy is on the verge of shifting into a higher gear perhaps growing in excess of 4% per annum, the first such occurrence since 2003. In the late 1990s, there were 4 consecutive years of 4% growth

The reasons for this optimistic outlook are tax cuts that increases productive capacity, a freeze and perhaps possible roll back of many onerous regulations enacted over the past 10 years, the number of job openings exceeding the number of job applicants the result of small business formation and finally small business confidence rising to the second highest level ever.

Twenty years ago, during the last era of strong capital spending that enabled the economy to expand at a 4% per annum rate for over 4 years, 90% of all job creation occurred in small businesses defined as companies employing 400 people or less.

During the past 10 years, the two major concerns of small business were regulation and lack of pricing power. Commenting about regulation and the long arm of government, for the first time in history, 2011 marked the first year small businesses stated government, not economic risk, was their greatest fear. It has since remained, but the percentage has dropped considerably.

Wow! Perhaps this is the single biggest reason why economic nationalism and populism is sweeping the country; contradicting statements from the educated elite dictating to the electorate in what to believe.

Regarding pricing power, the number of small businesses planning to raise prices is at a 10 year high and a record 35% of small companies are reporting higher compensation.

The two day Federal Reserve meeting concludes at 2:00. All are expecting another 0.25% increase. What comments will the Committee make about expected growth and inflationary pressures? Will any of the remarks resemble those of above?

Commenting about yesterday’s market action, markets were mixed. North Korea was a market nonevent, Brexit is still alive and there was little new on the trade front.

Last night the foreign markets were mixed. London was up 0.46%, Paris was up 0.33% and Frankfurt was up 0.38%. China was down 0.97%, Japan was up 0.38% and Hang Sang was down 1.22%.

The Dow should open firm, but all will focus on the FOMC’s comments as recent inflation statistics have reignited speculation that there could be a total of four increases in 2018. The 10-year is up 2/32 to yield 2.96%.


Chinese Front Company Used to Recruit Double Agents

By: Denise Simon | Founders Code

Mallory, who had top secret security clearance, worked as a CIA officer and was stationed in Iraq, China and Taiwan.

Mallory is a self-employed consultant with GlobalEx, LLC. and resides in Leesburg, Virginia. According to the criminal complaint, he graduated from Brigham Young University in 1981 with a Bachelor’s degree in political science.

Shortly thereafter, Mallory worked full-time in a military position for five years. Once he left that job, he continued his military service as an Army reservist and worked as a special agent for the State Department Diplomatic Security Service for three years (1987-1990).

Kevin Mallory Criminal Complaint by Chris on Scribd

Revealed: Chinese Front Company Used to Recruit U.S. Double Agents

A single reference buried deep within hundreds of pages of court filings in the case of convicted CIA turncoat Kevin Mallory reveals the name of a Shanghai-based “executive search firm” that bears the hallmarks of a classic espionage front, former intelligence operatives from the U.S. and Russia tell The Daily Beast.

The U.S. government’s evidence against Mallory, who was found guilty Friday of espionage-related charges, included a photograph of a business card belonging to alleged Chinese Ministry of State Security (MSS) agent Richard Yang, who presented himself as a corporate headhunter. Prosecutors said he was one of Mallory’s handlers. According to court documents, the picture was taken at Darren & Associates, a supposed corporate recruiter with no listed phone number or executives and an address that traces back to a rent-by-the-hour space on Shanghai’s Hubin Road.

Darren & Associates’ connection to the Mallory case has not been previously reported. The firm has been in business for either “around 40 years,” as its website claims, or since 2014, as stated on its LinkedIn page. The job networking site lists no actual former or current employees, and the company has a near-zero web presence, which is highly unusual for an organization that describes itself as a successful global enterprise.

“Clearly this is phony,” said former KGB sleeper agent Jack Barsky. “The first thing you do to figure out how real [a company is] is look at their website, and this is just not the footprint of a solid company.”

“Clearly this is phony… The first thing you do to figure out how real [a company is] by looking at their website, and this is just not the footprint of a solid company.” — former KGB sleeper agent Jack Barsky

It’s a “flimsy mechanism for them to use,” agreed former CIA officer Christopher Burgess. “To me, this is what someone would put up so that their business contact isn’t naked. But what it doesn’t do is talk about who they are, where they are, doesn’t give you names, and their mission is so general that it can cover anything.”

Richard Yang subsequently introduced Mallory to an associate, Michael Yang, who claimed to be affiliated with the Shanghai Academy of Social Sciences (SASS). It has a close relationship with the Shanghai State Security Bureau (SSSB), a sub-component of the Ministry of State Security, according to the FBI. The Shanghai security bureau “uses SASS employees as spotters and assessors,” says one court filing, and “FBI has further assessed that SSSB intelligence officers have also used SASS affiliation as cover identities.”

Chinese think tanks like the Shanghai academy “can be used to invite someone over who is either a person of interest or a source,” Peter Mattis of the Jamestown Foundation’s China Program told Bethany Allen-Ebrahimian and Elias Groll of Foreign Policy last year. “That person comes over and gives a talk, and they’ll be met and have meetings with the local state security element or the People’s Liberation Army.”

via Facebook

Others are based in the U.S., they pointed out. The China Institute of Contemporary International Relations describes itself as a “comprehensive research institution” but is also “an official numbered bureau of the Ministry of State Security, functioning rather like the CIA’s Open Source Center.”

Darren & Associates, the erstwhile headhunting firm, seems rather less sophisticated. Either the MSS was “too lazy” to create a more realistic front company, or they thought “no one would give a shit about this Mallory guy and no one would be checking it,” said a former Russian FSB officer now living in the U.S. under the pseudonym “Jan Neumann.”

But U.S. authorities did care, and Mallory’s scheme unraveled in 2017 when he was selected for secondary screening at Chicago’s O’Hare Airport after a trip to China. Although he said he had nothing to declare, customs officers found $16,500 in cash on him.

““An individual like Mallory, with 20-plus years of high-end intelligence community engagement should have known better than [to use] this weak cover story that the Chinese gave him.” — former CIA officer Christopher Burgess

“An individual like Mallory, with 20-plus years of high-end intelligence community engagement should have known better than [to use] this weak cover story that the MSS gave him,” said Burgess. “He should have picked up the phone and called the FBI and said, ‘Hey, these people say they’re legitimate businesspeople, and I don’t think they are.’ And he should have done that years ago.”

The details of exactly what Mallory gave up have yet to be publicly revealed, and probably won’t ever be, said Burgess. But according to prosecutors, Mallory gave away the most precious secrets of all—the names of U.S. agents in China.

A CIA information review officer said in court last year that the documents Mallory gave to the Chinese contained sensitive intelligence, analysis, and the names of assets that “could reasonably be expected to cause the loss of critical intelligence and possibly result in the lengthy incarceration or death of clandestine human sources.”

”It’s a betrayal in the truest sense of the term,” former CIA Inspector General Frederick Hitz told The Daily Beast.

FBI analysts further determined that Mallory “had completed all of the steps necessary to securely transmit at least four documents…one of which contained unique identifiers for human sources who had helped the U.S. government.”

Some of these files were stored on a Toshiba SD card, which Mallory concealed in aluminum foil and hid in his bedroom closet.

“We overlooked it twice,” FBI Special Agent Melinda Capitano testified Thursday.

“What made you think to open it?” the prosecutor asked.

“Usually in my training, small bits of foil like this contain drugs,” Capitano replied.

via PACER – The foil-wrapped SD card found in Mallory’s home.

Mallory’s defense team claims that the documents were worthless and that he was actually operating as an independent, self-directed counterintelligence officer of sorts to reel in the Chinese agents so he could eventually turn them into U.S. authorities. Burgess calls that “hogwash.” Mallory wasn’t freelancing in counterintelligence, he “was all-in” as an asset, in Burgess’ opinion.

“He was responsive to tasking, he used covert communications to reduce face-to-face interactions with his PRC contact,” said Burgess. “If I was validating a source, those are all indications that I have a good one.”

“He’s throwing something at the wall to see if it sticks,” laughed former Defense Intelligence Agency officer Ray Semko. “Just as long as they get one fool [on the jury] to believe it.”

Mallory’s attorney, Geremy Kamens, declined a request for comment.

Mallory, his wife, and one of his three kids lived in a four-bedroom, four-bathroom, 7,100-square foot house in Leesburg, Virginia, complete with a home theater and two fireplaces. He paid $1.15 million in 2005, a lot of money for a guy prosecutors said earned only $25,000 in the three years—all of it from his Chinese handlers.

He also has three adult children from a previous marriage. A court filing said Mallory had $50,000 in credit card debt, and about $2,500 in cash and investments. His wife, Mariah Nan-Hua Mallory, drives a school bus and earns roughly $9,000 a year.

In a motion previously filed with the court arguing against Mallory’s release pending trial, prosecutors said he had “demonstrated a pattern of dishonesty.”

“The defendant says and does anything he wishes to suit his particular needs, which seem largely to be finding an easy path out of his financial hardship, by betraying his government,” the motion stated.

A disguise kit found by FBI agents during a search of Mallory’s home.

However, Patsy Harrington, a real estate broker and close friend of Mallory’s who sold him his home, insists that Mallory is being totally mischaracterized.

“He is a loyal serviceman that was hurt in the line of duty in the Middle East, he’s a wonderful family man and a devoted Mormon with a wonderful wife and three highly accomplished grown children,” Harrington told The Daily Beast. “He’s a good man. I was a single mom and he was wonderful to me. He’s much better than 97 percent of the human beings I know.”

A LinkedIn recommendation from Min Xu, an associate professor at Central China Normal University describes Mallory as “a very faithful, honest, loyal, serious but kind, helpful, contagious person, very nice to everyone around, I will always remember his timely help and the warmth he gave to us when we were in trouble. He is really an amazing man.”

In fact, the Chinese agents who targeted Mallory initially reached out to him on LinkedIn. It’s a virtual goldmine for those looking to identify members of the “cleared community,” said Christopher Burgess, who has been contacted by people he assumed were foreign intelligence operatives more times than he can count.


Yet Chinese intelligence isn’t only interested in people with active security clearances. Anyone with access or influence can potentially be of value, and everyone from professors to scientists to journalists have received overtures from foreign spy services.

National security reporter Garrett Graff was targeted on LinkedIn by Evgeny Buryakov, a Russian SVR operative posing as a New York City investment banker. And a Chinese agent used LinkedIn to reach out to journalist Nate Thayer last year.

“On the day I received my first message from Chinese intelligence agents from the Ministry of State Security, they, of course, didn’t say they were Chinese spies,” Thayer wrote on his blog. “The note was from ‘Frank Hu,’ a ‘project assistant’ from Shanghai Pacific & International Strategy Consulting Co, saying he had found me on the Internet and was writing to ‘seek potential cooperation opportunities.’”

Predictably, there is no “Shanghai Pacific & International Strategy Consulting Co,” which doesn’t even maintain a rudimentary Darren & Associates-style website. “Hu” told Thayer the company was “a consulting firm, specializing in independent policy analysis and advisory services. We strive to help our clients properly assess political dynamics, risks and opportunities in countries and regions they operate in.”

“In terms of human source operations, the PRC ‘services’ are not all that sophisticated,” an intelligence community source told Thayer, “until they get you on their turf. So don’t go there–to Shanghai, that is–for any reason.”

Of course, there is no such thing as a foolproof system in espionage, and breaches like Mallory’s will surely happen again.

As Joseph Wippl, a 30-year veteran of the CIA’s National Clandestine Service, told The Daily Beast, “It’s part of the business.”