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Senator helping GATA, Germans helping gold
8:15p EST Saturday, January 15, 2000
Dear Friend of GATA and Gold:
Here's a special dispatch from GATA Chairman Bill
Murphy about our recent contact with the international
financial adviser, Martin Armstrong.
Please post it as seems useful.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Conversations With Marty Armstrong
Before He Was Thrown In Jail
By Bill quot;Midasquot; Murphy
January 15, 2000
A week ago today I had a two-hour conversation over the
phone with investment guru Martin Armstrong which was,
in many ways, quite remarkable. It was only a couple of
months ago we were almost at each other's throats about
For those of you new to this story, Armstrong presided
over Princeton Economics International, a renowned
investment research firm that was noted for its
Japanese fixed-income clients.
Armstrong was invited all over the world as a guest
speaker to comment about his views of the markets. To
give you some idea of the scope of his firm's worldwide
presence, I took the following off the
www.princetoneconomics.com web site:
quot;PEI seminars are held around the world in Tokyo,
Osaka, Hong Kong, London, Munich, Los Angeles,
Princeton, Vancouver and Edinburgh, with normally
annual events held in Beijing, Sydney and selected
cities in Southeast Asia.
quot;All seminars are recorded and transcripts are normally
available. Selected seminars are also available on
video tape in NTSC or PAL. Audio tapes are available,
as well, normally in English but also in Japanese for
those held in Japan.quot;
Before I get into the matter, here is the latest to
bring you up-to-date about Martin Armstrong:
* * *
Armstrong jailed over allegedly missing assets
By Tony Hagen
Trenton (N.J.) Times
Saturday, January 15, 2000
NEW YORK -- Commodities guru Martin Armstrong was
jailed last night after a federal judge ruled he
willfully disobeyed a court order to turn over
corporate records and millions in gold and antiquities.
Armstrong, who faces criminal securities fraud charges,
was accused of concealing items belonging to Princeton
Economics International and Princeton Economics
Institute of Carnegie Center in West Windsor, N.J.
Armstrong, the head of the two companies, has pleaded
innocent to charges he bilked Japanese investors out of
$1 billion, and spent $16 million of their money to
acquire gold, rare coins, and art work.
U.S. Magistrate Richard Owen ordered Armstrong held for
18 months or until he divulges the location of the
missing assets. Armstrong was taken from the court to
New York Metropolitan Correction Center.
Prosecutors said yesterday that Armstrong turned over a
portion of the assets but destroyed corporate records
they had demanded.
quot;In my opinion there is a substantial number of coins
missing, approximately $1.3 million,quot; said Richard
Cohen, court-appointed receiver. Cohen has taken
control of Armstrong's companies and is following the
Cohen said $1 million in gold bullion was still
missing, and Armstrong sabotaged four company computers
Wednesday, shortly before he was to turn them over to
quot;We're still about $15 million short,quot; said Martin
Glenn, a counsel for the receiver.
Armstrong, 50, contended many of the assets were either
turned over to the receiver or were already in the
receiver's possession. He said 500 missing gold
Krugerrands were given to staff as pay or bonuses and
102 missing gold bars were used to buy out a Japanese
partner. He said many of the 200 missing Greek and
Roman coins were given to his Japanese investors as
quot;So far, everything I have found I have turned over,quot;
Armstrong testified, explaining that this week he
rented a car and drove assets daily to the receiver's
New York office. He complained the receiver wouldn't
give him an armored car.
quot;I've been making deliveries to the receiver every day.
It's an ongoing process. I'm not finished yet,quot;
Armstrong told Owen.
But Owen, in his decision to have Armstrong arrested,
cited 591 computer files that Armstrong erased this
week plus the four damaged computers, which were at
Armstrong's beach house in Loveladies, N.J.
quot;The story about the computers is a rather
disheartening one about the state of mind of someone
who was really going to do the receiver in. It's one
thing to hit the delete button, it's another thing to
write X's over everything in 591 files,quot; Owen said.
Owen notes that the 591 files, which were detected by a
computer forensics expert, were deleted Wednesday night
after Armstrong had been ordered to turn the computers
quot;I did not intentionally delete the files,quot; Armstrong
said, adding they only contained personal information,
not corporate records.
Armstrong was arrested Sept. 13 and charged with
massive securities fraud by the U.S. Attorney's Office,
the Securities and Exchange Commission and the
Commodity Futures Trading Commission. Regulators are
attempting to recover the trader's corporate assets so
Japanese investors who bought his Princeton Note Bonds
can be partly reimbursed.
Investigators have alleged Armstrong lost up to $400
million of his investors money in fruitless currency
and commodities trades. They said he faked account
statements to hide the losses and diverted corporate
funds to buy luxuries for himself and his family.
Armstrong has denied the charges, saying he's being
made a scapegoat for the actions of others.
Also yesterday, prosecutors alleged that hours before
his Sept. 13 arrest, Armstrong attempted to quot;clean outquot;
his corporate accounts to deposit money for his defense
in lawyers' accounts. They said the trader succeeded in
transferring about $750,000 but much of the remaining
money was blocked by an asset freeze that was also
imposed on Sept. 13.
Armstrong testified yesterday that he had made a good-
faith effort to return everything investigators asked
for. Strange details emerged of how he claimed to have
exchanged gold coins for Japanese gifts of tea and
decorative cups, kept 102 missing gold bars stuffed in
a couch at his Maple Shade, N.J., home for four months,
and kept a $750,000 bust of Julius Caesar hidden in a
shed in his back yard.
Armstrong also described exchanging $7 million in
missing coins to take control of a precious metals fund
from an Australian business associate, Nigel Kerwin. He
also said he handed over the missing gold bars while in
a parking lot near his home to a Japanese associate,
Akira Setagawa, who is under indictment in Japan in a
related securities case.
Cohen disputed Armstrong's excuses for the missing
funds and art, calling them a smokescreen. Cohen said
he regretted that he didn't ask Owen to assign federal
marshals to accompany Armstrong last week when he was
ordered to round up company documents and assets.
quot;I think Mr. Armstrong did his best, but his best to
evade the court order and his best to destroy the hard
drives,quot; he said.
* * *
My conversation last Saturday with Armstrong followed a
long, startling email correspondence from him. It was
sent to me in confidence and will not be revealed here
until he gives the OK. Just for the record and self-
protection purposes, it should be known that all
correspondence between Armstrong, GATA
Treasurer/Secretary Chris Powell, and I has been
forwarded to GATA's attorneys.
My phone conversation with Armstrong touched on many
subjects. I mostly just listened -- my mouth wide open
most of the time, as the conversation centered around
such subjects as Armstrong's receiving death threats
from the Japanese, the billionaire's club that
manipulates the metals markets, incriminating Republic
Bank tapes, bribes paid in Thailand, the Japanese and
Republic Bank, the persecution of his family, including
his 81-year-old mother, and the efforts of the U.S
Attorney's office efforts to deprive him of his First
and Fifth Amendment rights.
The scariest part of the conversation was about Edmond
Safra, the recently murdered Republic Bank founder.
Marty knew which phone lines that Safra spoke on
directly to the Republic traders. According to
Armstrong, quot;All the conversations about every
manipulation you ever wanted to hear are there.quot; He
said that the problem was that 10 days after he told
the feds that he was after sensitive information that
would expose the manipulations, Safra died mysteriously
This is not kid's stuff we are talking about here.
Ironically, Armstrong did not know as much about GATA
as I thought he did. For example, he thought GATA was
about going back to a gold standard. I told him that
all we wanted was a fair, free gold market that was not
manipulated. He thought we were just focused on the
central banks of the world that we believed to be
conspiring to hold down the gold price. I told him that
we felt that the collusion involved certain New York
bullion dealers with the help of the New York Federal
Reserve Bank and the U.S. Treasury Department.
We were planning to get together to determine some sort
of relationship. He told us that he could provide
evidence (tapes and documents) that the metals markets
in New York have been manipulated. Naturally, smoking-
gun information of that nature is of great interest to
To give you some idea of how close we were to getting
together, the following is the text of correspondence
between GATA's Chris Powell and Armstrong over the past
* * *
Still alive so far. I will speak to my lawyer to see if
early next week is OK for a meeting. One of our clients
has sued Republic and we are unofficially cooperating
together to try to get additional discovery.
U.S. government has rushed in to try to stay our
discovery. We are about to make a fight next week to
try to force Republic to comply with our subpoenas. The
bastards are hiding behind the U.S. government big-
I am not sure what is going on. I have been told that
the receiver is now going to try a contempt charge for
my not handing in my keys despite the fact that the
locks and security codes have been changed.
They just don't want me out and about. They made me get
seven people to co-sign a $5 million bond for bail. I
had 12 people to came forward. That pissed off the
government and they lost the bail issue. So they are
trying everything they can under the civil case for
contempt of anything. It appears that a contempt-of-
court can land you in jail for about one year. After
that, higher courts deem it to be cruel and unusual
So if you tell a judge to get off and exercise your 1st
Amendment in a protest against the government, you go
to jail, since while in court you are not allowed to
defame the government. I always thought that was the
very point of the First Amendment: to ensure one's
ability to speak out against corrupt governments.
These buggers have twisted everything around
Will be in touch.
All the best.
* * *
If the judge puts me away on Friday, and he is trying
his best to find the slightest reason, I will be unable
to attend our meeting. But perhaps you can visit me in
A client is trying to organize a defense fund in case
the judge strips all my attorneys of everything they
have already spent retroactively. This seems to be an
attempt to ensure that no lawyer will take the case.
Brian Code, the U.S. attorney, appears to have slipped
up and told the staff in Princeton that this case will
never go to trial. When Jim Smith asked how that can
happen, he changed his tune and then said it will not
come to trial for at least a year.
Boy, this game is so rigged, it is beyond belief.
All the best.
* * *
As I said before, GATA has no clue about the guilt or
innocence of Marty Armstrong. That is not our point.
The man is entitled to defend himself and it would
appear he is getting a raw deal. The way I see it, quot;The
enemy of my enemy is my friend.quot; Republic Bank would
not let us open a money market account there when GATA
was first formed. At that time, I told Chris Powell
that Republic, a bullion dealer, would be hearing from
us in the future. The future is now, in a sense.
You might ask: Why embrace someone who has scorned us?
Well, let me explain it to the naysayers as best I can.
This gold game is a WAR that will be fought to the
bitter end -- I am loathe to use the word quot;deathquot; as a
banker friend does. The FBI embraced quot;Sammy the Bullquot;
to nail John Gotti, John Dean was called on by the
Nixon chasers, and Monica Lewinsky was wooed by those
out to prove President Clinton was lying. Should GATA
use any less a tactic than used by our own FBI and the
Democratic and Republican parties in the United States?