In 2008, one of Dawood Ibrahim’s top henchmen was Naresh Patel. Mr. Patel presided over an underground Al Qaeda and Mafia banking network with tentacles in the United Arab Emirates, India, Pakistan, China, Nigeria, Italy, Afghanistan, South Africa, the Congo, Nepal, the Cook Islands, Great Britain, and the United States.
The principal function of this network was to manage Al Qaeda drug profits — hundreds of millions of dollars that both Al Qaeda and its subsidiary, the Albanian Mafia, had earned from selling not just heroin, but also cocaine.
According to the U.S. Department of Justice, much of that money was transferred through banks in Dubai, and onwards to at least fifteen accounts that Patel held at Man Financial, the outfit that was (as we have seen) tied to Michael Milken, Bernie Madoff, Tuco Trading, and BKS in Moscow.
Patel traded huge volumes through these Man Financial accounts in 2008, but the DOJ didn’t catch him until 2009, at which point he was charged with transacting, through Man Financial, massive volumes of “wash trades” –simultaneously selling and buying commodities. He was doing the same thing with securities.
The DOJ described this activity as “money laundering” because money laundering was part of it, and money laundering is a concept that is fairly well understood by counterterrorism officials. Market manipulation, by contrast, is less well understood, judging from the fact that few people are ever prosecuted for it, though it happens constantly and, sometimes, on massive scales.
There is no sign that the DOJ understands that people (like Naresh Patel) who# deploy “wash trades” are not just laundering money – they are manipulating markets.# They use “wash trades” (simultaneously buying and selling the same securities) to create a tremendous amount of trading noise as cover under which they can manipulate prices down.
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