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   Overview  



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Overview of 
MorganStanleyGate

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Why Call It "MorganStanleyGate"?


This is a scandal involving Morgan Stanley, with parallels to Watergate:

Initial crime - The initial transgression pales to those that followed;
 Cover-up - Extensive criminal activities have been employed in the cover-up;
"Deep Throat" - An inside source has provided vital information; 
 Wire-Tapping - Many forms of privacy invasion were employed;
 Above The Law - The unlawful acts were known & endorsed by senior executives;
 Quest for the Truth - The persistence of a few will ensure the "Truth" prevails; and
 Resignation - Those culpable will eventually resign in disgrace from their positions of influence.

Hence, this scandal is aptly coined "MorganStanleyGate".


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The Central Figure


In this matter, the target of Morgan Stanley's wrath has been Spencer C. Young, a former Executive Director at the firm.  He is an Ivy-league educated family man with four sons, who was born and raised in Long Island, New York.  

His professional expertise spans more than 20 years in commercial real estate investment banking and redevelopment.  The tribulations heaped on Mr. Young and his family since November 20, 2002 have caused unimaginable pain and suffering, and the paradox of it all is that it's because he had:

  Created the IQ® Franchise -- Developed a highly successful proprietary brand of commercial backed securities ("CMBS"), known as the IQ® (Representing "Institutional Quality") brand, whose intrinsic value was $250 million when developed and considerably more thereafter;
  Earned The Largest Banking Fee --Closed the largest monetization of farm loans ever, thereby earning the biggest fee that year for his investment banking/securitization group; and
  Enjoyed a Loyal Client Following -- Cultivated a client base willing to follow him to whatever his venue of employ was, including some of the largest and most prestigious financial institutions in the CMBS industry.




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The Crimes

  

MorganStanleyGate began November 20, 2002, when a few Morgan Stanley employees in New York executed employment-related fraud.  This was followed by a word-of-mouth smear campaign and related tortious acts intended to destroy a career, and thereby protect a valuable franchise, called IQ®.   Kirkland & Ellis ("K&E") then ensured the denial of due process to the resultant legal claims though extensive obstruction of justice.  Over time, K&E became increasingly involved by overseeing a network of corruption, based on a barter system of favors that was managed through senior partners at other law firms.  As the scandal crossed state lines, it escalated through criminal activities represented by the acronym, "FRESCA":


Fraud - The employment-related fraud in New York grew to become a massive criminal fraud, including fraudulent foreclosures in North Carolina, which came to pass through . . .

Racketeering - Involving organized conspired illegal activities among unsavory bankers, attorneys and public officials, often managed through use of  . . .

Extortion - Getting others to carry out the transgressions necessary to perpetuate the cover-up of MorganStanleyGate, using threats of retribution should they not cooperate and rewards if they do, much of which involved . . .

Sabotage - The staged sabotage of commercial real estate investment properties so as to economically destabilize them and create the illusion that the fraudulent foreclosures and grand larceny theft of properties were justified and lawful, which could only occur in an environment riddled with . . .

Corruption - Widespread corruption among bankers, lawyers and public officials, reflecting perhaps a disturbing reality that "everyone has a price", and further supported by marginalizing or permanently silencing the central figure in this scandal by . . .

Assassination - Of personal character and professional reputation through choreographed smear campaigns in New York and North Carolina, as well as a blogger based in San Francisco); and actual murder via attempted contract "hits" staged to look like accidents.



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The Motives

So that he wouldn't "jump ship" in 2002, various executives at Morgan Stanley promised Mr. Young a promotion, an "outsized" bonus and additional investment banking responsibilities for the above accomplishments; however, ten days prior to Morgan Stanley's fiscal year end, he was surreptitiously included in a firm-wide downsizing -- the result of a fraud devised principally by two collegues of his at Morgan Stanley (Warren Friend and John Westerfield), and assisted by a third (Tony Tufariello).  Mr. Young founded the CMBS business at JPMorgan in 1994, and during his tenure there as Chief Operating Officer of its CMBS business, Mr. Young competed directly against Warren Friend for institutional client business . . . AND NEVER LOST.  Moreover, John Westerfield's axe to grind with Mr. Young was predicated on "getting him back" for transferring out of Mr. Westerfield's group in 2000.

Accordingly, Mr. Friend (with the backing of Mr. Westerfield) represented to the "higher ups" at Morgan Stanley that he alone was responsible for creating the IQ® franchise, and that Mr. Young had little to do with it.  This was not only untrue, the firms who participated in the IQ® brand transactions agreed to move their business to whatever rival Wall Street Mr. Young joined.  Moreover, many of the group heads at these firms agreed to come work for Mr. Young under an integrated merchant banking structure he devised, which was called Project Atlas.

If Mr. Young joined another Wall St. firm, it would have negatively impacted Morgan Stanley's CMBS franchise generally and would have wiped out the $250 million + value of the IQ® brand, specifically.  Moreover, the fraud devised by Messrs. Friend and Westerfield's fraud would have been exposed.