— FEATURED —
— FOLLOW US —
— POLICIES —
Except where indicated, Boing Boing is licensed under a Creative Commons License permitting non-commercial sharing with attribution
— FONTS —
In Rolling Stone, the amazing Matt Taibbi documents a breaking price-rigging scandal involving the world's biggest banks. The $500 trillion conspiracy to game the interest-rate swaps victimizes every city, town, state and nation that uses bonds to raise money, diverting an unimaginable sum from tax coffers to the pockets of mega-rich bankers. If you've been staring around at the empty storefronts, closed libraries and schools, homeless and breadlines since 2008 and wondering "Where did all the money go?" then wonder no longer.
Though interest-rate swaps are not widely understood outside the finance world, the root concept actually isn't that hard. If you can imagine taking out a variable-rate mortgage and then paying a bank to make your loan payments fixed, you've got the basic idea of an interest-rate swap.
In practice, it might be a country like Greece or a regional government like Jefferson County, Alabama, that borrows money at a variable rate of interest, then later goes to a bank to "swap" that loan to a more predictable fixed rate. In its simplest form, the customer in a swap deal is usually paying a premium for the safety and security of fixed interest rates, while the firm selling the swap is usually betting that it knows more about future movements in interest rates than its customers.
Prices for interest-rate swaps are often based on ISDAfix, which, like Libor, is yet another of these privately calculated benchmarks. ISDAfix's U.S. dollar rates are published every day, at 11:30 a.m. and 3:30 p.m., after a gang of the same usual-suspect megabanks (Bank of America, RBS, Deutsche, JPMorgan Chase, Barclays, etc.) submits information about bids and offers for swaps.
And here's what we know so far: The CFTC has sent subpoenas to ICAP and to as many as 15 of those member banks, and plans to interview about a dozen ICAP employees from the company's office in Jersey City, New Jersey. Moreover, the International Swaps and Derivatives Association, or ISDA, which works together with ICAP (for U.S. dollar transactions) and Thomson Reuters to compute the ISDAfix benchmark, has hired the consulting firm Oliver Wyman to review the process by which ISDAfix is calculated. Oliver Wyman is the same company that the British Bankers' Association hired to review the Libor submission process after that scandal broke last year. The upshot of all of this is that it looks very much like ISDAfix could be Libor all over again.
"It's obviously reminiscent of the Libor manipulation issue," Darrell Duffie, a finance professor at Stanford University, told reporters. "People may have been naive that simply reporting these rates was enough to avoid manipulation."
And just like in Libor, the potential losers in an interest-rate-swap manipulation scandal would be the same sad-sack collection of cities, towns, companies and other nonbank entities that have no way of knowing if they're paying the real price for swaps or a price being manipulated by bank insiders for profit. Moreover, ISDAfix is not only used to calculate prices for interest-rate swaps, it's also used to set values for about $550 billion worth of bonds tied to commercial real estate, and also affects the payouts on some state-pension annuities.
So although it's not quite as widespread as Libor, ISDAfix is sufficiently power-jammed into the world financial infrastructure that any manipulation of the rate would be catastrophic – and a huge class of victims that could include everyone from state pensioners to big cities to wealthy investors in structured notes would have no idea they were being robbed.
Everything Is Rigged: The Biggest Price-Fixing Scandal Ever (Thanks, Elix!)
Since at least 2001, Colin Purrington, a former Swarthmore Evolutionary Biology prof, has been publishing a great guide to conference posters that is widely read and linked. It's also widely plagiarized, and Purrington sends notices to people whom he catches passing it off as their own work, asking them to remove it. Normally, this works.
But not in the case of The Consortium for Plant Biotechnology Research, Inc., a company that receives millions in federal grants to fund biotech research. When Purrington sent CPBR an email telling them off for plagiarizing him, they responded by accusing him of being the plagiarist, threating him with massive damages, and demanding that he remove his own work immediately and permanently.
Purrington responded with a pretty good note about the whole awful mess. Though I think he overstates the copyright case here. In particular, he discounts out of hand the idea that reproduction in educational contexts can't be fair use; this is just wrong -- fair use is fact intensive, and educational use tilts the scales in favor of a successful defense. On the other hand, plagiarism (though not illegal) is a cardinal sin in education, and educators who pass off his work as their own may not be breaking the law, but they are unambiguously violating a core ethic of education and scholarship.
But back to CPBR. This is not only plagiarism, it's also copyright infringement, and it's copyfraud -- claiming copyright on something you hold no rights to. It's unethical, it's illegal, and it's fraudulent. CPBR president and chairman Dorin Schumaker (also sole employee -- who, according to its most recent 990, receives $213,964 a year) is not available for comment, and both its attorneys and whomever answers its phone hung up on the Chronicle of Higher Ed when called for clarification.
So: crooks and cowards.
I called the main number for the Consortium for Plant Biotechnology Research and was told that the president and chairman, Dorin Schumaker, was not available and might not be available for weeks. Schumaker is the only paid employee listed on the nonprofit’s most recent available Form 990 tax filing (her salary, according to the filing, is $213,964). I then called a number listed for a Dorin Schumaker in St. Simons Island, Ga., where the consortium is based. The person who picked up the phone declined to answer questions and hung up when asked if she was Dorin Schumaker. The consortium’s lawyer, David Metzger, also hung up on me. In a follow-up e-mail, he said he was abiding by his client’s wishes.
If they can explain how they created, in 2005, a document that Purrington posted online years before, they’re keeping that explanation mum for now.
Too often in plagiarism cases, the victim never really gets satisfaction. Maybe the offending passage is taken down. Perhaps a footnote is added. The plagiarist might even manage a mumbled apology. But the penalties are often piddling. This is the first case I’ve heard of in which the apparent victim may be the one who gets punished.
Purrington also states that he prohibits "paraphrase plagiarism, which is when you copy sentences and phrases but make minor word changes to mask your theft" -- which, again, overstates the scope of copyright. Paraphrasing material, quoting, and transformative adaptation are, in fact, classic fair use, despite Purrington's statement that he's "lost my patience with people claiming that Fair Use allows them to bypass my copyright. Really, folks?" Well, yes, really: fair use is the right to make uses and copies without permission from the copyright holder. It's not without limits, but it's also not nothing. Incidental copying, copying for the purposes of commentary and criticism, format-shifting, archiving, adaptation to assistive formats, etc -- all potentially fair use. Scholarship depends on fair use and other limitations in copyright, and while Purrington's poster is a great and informative work that greatly assists scholarship, his statements about the scope of copyright and its limitations and exceptions are greatly harmful to it.
I applaud the good work he's done in his guide, and am firmly on his side when it comes to the terrible treatment he's gotten at the hands of the CPBR. But I wish he'd check out some of the equally excellent guides to fair use so that all of the information he disseminates was just as accurate and useful as his conference poster piece.
Adding Insult to Plagiary? [Chronicle of Higher Education/Tom Bartlett]
Today marked the long-awaited courtroom showdown of notorious copyright porno trolls Prenda Law (previous posts) and United States District Judge Otis D. Wright II, the judge who figured out that Prenda was running something that looked a blackmail racket that involved systematic fraud against courts around the country. After stalling and fum-fuhing, Prenda's lawyers and principals were dragged before Judge Wright, where they sat for a hearing that ran for 12 whole minutes before Wright furiously banished them from his courtroom. Ken "Popehat" White was there, and sent tantalizing tweets about the total trainwreck he'd witnessed, which he has now had a chance to write up in full.
In a nutshell, the Prendateers showed up and took the Fifth, refusing to speak. Their lawyer tried to enter some argument into the record, but the judge didn't allow it. Prenda had filed no briefs, and had been called to answer basic, factual questions about lawsuits. Wright wasn't happy about it. Ken has written up a list of likely consequences Prenda will now face. It's not pretty. At very least, the firm and its activities are at an end. At most (though not likely), this could end in prison for the principals here.
Judge Wright grew steadily and visibly more outraged. "I want to know if some of my conjecture is accurate — and the only way to know is to have the principals here and ask them questions. This is an opportunity for them to protect themselves," he said. But Steele's lawyer confirmed his client would exercise his right to remain silent. Attorneys for Paul Hansmeier, Paul Duffy, and Angela Van Den Hemel confirmed their clients, too, would invoke their rights to remain silent. Judge Wright did not — unless I missed it — confirm whether Peter Hansmeier or Mark Lutz would answer questions.
An Opportunity To Be Heard
Heather Rosing, appearing for Paul Duffy, Angela Van Den Hemel, and Prenda Law, rose and asked Judge Wright for an opportunity to present "about a half hour" of argument on the points in his Order to Show Cause. Look: when you are a lawyer, representing a client, you have to stand up. You have to hold your ground even in the face of a furious federal judge. When a judge is yelling at you, however unsettling it is, you have to hold fast and remember you are there to represent the interests of your client against the terrible power of the court. Heather Rosing stood up, and has my admiration, whatever I think of her clients.
Judge Wright was uninterested in hearing legal argument, as opposed to testimony or evidence. "My clients have a right to a reasonable opportunity to be heard," Ms. Rosing protested. "Excuse me?" thundered Judge Wright, probably thinking — not unreasonably — that Ms. Rosing's clients could have filed briefs in advance to address any legal arguments they had, and that Ms. Rosing's clients have been evading questions for months. Judge Wright began to count off the questions he wanted answered. "I'm looking for facts," he said. He wanted to know who directs Prenda Law's litigation efforts, who makes its decisions, whether there is another Alan Cooper, and what happens with the money Prenda Law makes from settlements. Ms. Rosing answered (wisely, and properly) that she could not personally testify to those things. Why, Judge Wright demanded, did Prenda Law conceal its attorneys' financial interest in the cases? "There's no evidence that they have an interest," Ms. Rosing protested. "Excuse me?" Judge Wright boomed even louder. Were there windows, they would have rattled. "Have you read Paul Hansmeier's deposition?" he demanded, referring to the bizarre deposition in which Paul Hansmeier failed to explain Prenda Law's shadowy owners or flow of funds. "I have," Ms. Rosing said, but stood her ground.
Retraction Watch, a website that documents the retraction of scientific papers, has had a series of articles about disgraced cancer researcher Anil Potti abruptly censored by WordPress in response to a DMCA copyright complaint from a dodgy Indian website that appears to have copied all the articles to its own site, then complained to WordPress on the grounds that Retraction Watch had copied it:
One of the cases they followed was Anil Potti, a cancer researcher who, at the time, worked at Duke University. Potti first fell under scrutiny for embellishing his resume, but the investigation quickly expanded as broader questions were raised about his research. As the investigation continued, a number of Potti's papers ended up being retracted as accusations of falsified data were raised. Eventually, three clinical trials that were started based on Potti's data were stopped entirely. Although federal investigations of Potti's conduct are still in progress, he eventually resigned from Duke.
In all, Retraction Watch published 22 stories on the implosion of Potti's career. In fact, three of the top four Google results for his name all point to the Retraction Watch blog (the fourth is his Wikipedia entry). Despite the widespread attention to his misbehavior, Potti managed to get a position at the University of North Dakota (where he worked earlier in his career). Meanwhile, he hired a reputation management company, which dutifully went about creating websites with glowing things to say about the doctor.
This morning, however, 10 of the Retraction Watch posts vanished. An e-mail Oransky received explained why: an individual from "Utter [sic] Pradesh" named Narendra Chatwal claimed to be a senior editor at NewsBulet.In, "a famous news firm in India." Chatwal said the site only publishes work that is "individually researched by our reporters," yet duplicates of some of the site's material appeared on Retraction Watch. Therefore, to protect his copyright, he asked that the WordPress host pull the material. It complied.
The Ars Technica article skirts outright accusation, but makes a clear inference that a "reputation management company" committed fraud as part of a campaign to rehabilitate the reputation of Potti.
One important thing to note is that WordPress isn't obliged to respond to DMCA takedowns, but if it fails to do so, it could be jointly sued, along with its users, over the alleged infringement. In theory, though, WordPress could decide that these takedown requests don't pass the giggle test, reinstate the posts, and tell the company that sent in the notices to sue and be damned.
Site plagiarizes blog posts, then files DMCA takedown on originals [John Timmer/Ars Technica] (via Making Light)
Last week, Shinya Yamanaka won a Nobel Prize for figuring out how to make adult stem cells revert to an embryonic (and much more medically useful) state. Within days, another scientist unconnected to Yamanaka, claimed to have produced such cells from human heart tissue and injected them back into human patients in a clinical trial. What's more, the researcher, Hisashi Moriguchi, claimed that a measure of his patients' heart function improved by 41.5% after the transplant.
It's hard to say which is crazier: The claims themselves, or the speed with which Moriguchi's story has completely fallen apart. Evidence suggests that these kind of re-programmed adult stem cells might be more likely to turn cancerous. Because of that, one of the first questions people asked was about the ethics committee that approved the research. Moriguchi said he worked for Harvard and that Harvard had signed off on his clinical trial.
And that's where things got nuts. Because Harvard had never heard of this study. And Moriguchi does not work there, anyway. In fact, this might not even be his field — the only professional affiliation that New Scientist could track down for him was as a visiting researcher in cosmetic surgery at The University of Tokyo. Also: The transplants may or may not have actually happened and Moriguchi might be plagiarizing images from other scientists. The worst part about this (from my perspective as a journalist) is that it was stem cell researchers who had to call out the fraud, after a major Japanese newspaper swallowed the story hook, line, and sinker.
You can follow the story much more in-depth at IPSCell.com, the blog of UC Davis stem cell researcher Paul Knoepfler.
Check out this post of Knoepfler's — written the day before the Moriguchi madness began — for more information on the risks of reprogrammed adult stem cells, the ongoing safety research, and proposed time-tables for when we will likely try these things out on humans for real.
The idea itself— to build a car that runs on ordinary water— is total crap, scientifically. It violates at least one law of physics, and pisses off a few others. But the idea behind the idea— a car that runs on something so plentiful and cheap it’s almost valueless— will never go away. It’s just too tantalizing to give up.
Here's an issue we don't talk about enough. Every year, peer-reviewed research journals publish hundreds of thousands of scientific papers. But every year, several hundred of those are retracted — essentially, unpublished. There's a number of reasons retraction happens. Sometimes, the researchers (or another group of scientists) will notice honest mistakes. Sometimes, other people will prove that the paper's results were totally wrong. And sometimes, scientists misbehave, plagiarizing their own work, plagiarizing others, or engaging in outright fraud. Officially, fraud only accounts for a small proportion of all retractions. But the number of annual retractions is growing, fast. And there's good reason to think that fraud plays a bigger role in science then we like to think. In fact, a study published a couple of weeks ago found that there was misconduct happening in 3/4ths of all retracted papers. Meanwhile, previous research has shown that, while only about .02% of all papers are retracted, 1-2% of scientists admit to having invented, fudged, or manipulated data at least once in their careers.
The trouble is that dealing with this isn't as simple as uncovering a shadowy conspiracy or two. That's not really the kind of misconduct we're talking about here.
Scientists aren't always right. In fact, individual research papers turn out to be wrong pretty often and scientists are the first people to tell you that they don't know everything there is to know. They're just working on it with more rigor than most of us.
But scientists are also people. And sometimes, they lie. At Ars Technica, John Timmer looks at some of the most famous cases of scientific fraud and comes away with 8 key lessons that show us how science's biggest scam artists got away with faking their data—sometimes for years.
1) Fake data nobody ever expects to see. If you're going to make things up, you won't have any original data to produce when someone asks to see it. The simplest way to avoid this awkward situation is to make sure that nobody ever asks. You can do this in several ways, but the easiest is to work only with humans. Most institutions require a long and painful approval process before anyone gets to work directly with human subjects. To protect patient privacy, any records are usually completely anonymized, so no one can ever trace them back to individual patients. Adding to the potential for confusion, many medical studies are done double-blind and use patient populations spread across multiple research centers. All of these factors make it quite difficult for anyone to keep track of the original data, and they mean that most people will be satisfied with using a heavily processed version of your results.
3) Tell people what they already know. Since you don't want anyone excited about your work, due to the likelihood they will ask annoying questions, you need to avoid this reaction at all costs. Under no circumstances should your work cause anyone to raise an intrigued eyebrow. The easiest way to do this is to play to people's expectations, feeding them data that they respond to with phrases like "That's about what I was expecting." Take an uncontroversial model and support it. Find data that's consistent with what we knew decades ago. Whatever you do, don't rock the boat.
Seen enough video of auto insurance fraudsters being exposed by front-facing dashboard cameras? One fellow in Russia thought up a clever way to get the police in trouble, but didn't count for the fact that dashcams can be turned around. [Video Link]
In this video recorded on a dashboard-mounted camera, Raguruban Yogarajah stops his car in the middle of the highway—then lets it roll back into following traffic. Herman Sham, the other driver, claims to have been subjected to a shakedown as the two motorists examined the damage: $500 cash, or the cops get called.
Thanks to Sham's dashcam, however, it was Yogarajah who received charges: fraud, attempted fraud and public mischief.
Russia appears to be ground zero for this sort of shenanigan. Violent confrontations abound, but my favorite is this driver's ostentatious display of frustration and despair at being rear-ended by such an irresponsible dri--Oh wait, you have a dashcam? I'll be going, then.
There are lots of Dashcams on Amazon, but it looks like you need to spend at least $50 to get something decent. And they all kinda look janky, if you ask me. Would a GoPro be a better bet, or do you need a specialized device for battery-life reasons?
Owners of Cisco/Linksys home routers got a nasty shock this week, when their devices automatically downloaded a new operating system, which locked out device owners. After the update, the only way to reconfigure your router was to create an account on Cisco's "cloud" service, signing up to a service agreement that gives Cisco the right to spy on your Internet use and sell its findings, and also gives them the right to disconnect you (and lock you out of your router) whenever they feel like it.
They say that "if you're not paying for the product, you are the product." But increasingly, even if you do pay for the product, you're still the product, and you aren't allowed to own anything. Ownership is a right reserved to synthetic corporate persons, and off-limits to us poor meat-humans.
Joel Hruska from ExtremeTech reports:
This is nothing but a shameless attempt to cash in on the popularity of cloud computing, and it comes at a price. The Terms and Conditions of using the Cisco Connect Cloud state that Cisco may unilaterally shut down your account if finds that you have used the service for “obscene, pornographic, or offensive purposes, to infringe another’s rights, including but not limited to any intellectual property rights, or… to violate, or encourage any conduct that would violate any applicable law or regulation or give rise to civil or criminal liability.”
It then continues “we reserve the right to take such action as we (i) deem necessary or (ii) are otherwise required to take by a third party or court of competent jurisdiction, in each case in relation to your access or use or misuse of such content or data. Such action may include, without limitation, discontinuing your use of the Service immediately without prior notice to you, and without refund or compensation to you.”
Since the Service is the only way to access your router, killing one would effectively kill the other.
Oh, and Cisco reserves the right to continue to update your router, even if you set it not to allow automatic updates.
However, the current policy reserves the right to change it back.
The current policy also allows Cisco to discontinue your access to your router if you download pornography, or if someone complains about you, without a court order, evidence or a chance to state your case and face your accuser.
They have also provided users with a way to back out of the "cloud management" "feature."
But, as noted, Cisco still reserves the right to change how your router works, even if you set it not to accept automatic updates.
Peter sez, "This blog entry describes how Alan Rice, a student in Ireland, became suspicious about some of the photos displayed as 'Live psychics' to be called at €2.44/min on Irish TV. He used image searches to find photos of some of the 'psychics' on stock photo sites. Other people chipped in and..."
Psychic Pat was in fact a bought stock photo! I quickly tweeted about this and from that I was pointed to the boards.ie thread about the show where I posted the same photos. Things certainly took off from there and some wonderful people there started finding pretty much all the psychics listed on their website from various places around the internet including, from what I gather, a personal Flickr photo. It really begs the question who are you talking to? And in some cases from what I’ve read you only get through to a hold message.
Not only are these “psychics” giving out random pieces of information based on any detail they get from a caller they are exploiting some really vulnerable people who are desperately seeking hope for their current situation. In the brief time I watched last night there was even a call about a missing son for Christ’s sake!
How on earth can TV3 let this deplorable scam be aired and stand over this? It must be stopped from broadcasting and the money (€60 in some cases) returned to the callers.
In Rolling Stone, Matt Taibbi is his usual incandescent self in reporting on the United States of America v. Carollo, Goldberg and Grimm, a bid-rigging trial against brokers at GE Capital, which implicated virtually every bank on Wall Street (and many overseas banks) in a multibillion-dollar municipal bond bid-rigging fraud, a fraud that skimmed a piece of every substantial municipal project in America, from public pools and baseball diamonds to subway stations and housing projects. Bid-rigging, a process perfected by the mafia, has been practiced by the financial sector on a scale never dreamed of by the simple men of the crime syndicates, and the scam is starting to unravel.
The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.
In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.
USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordinated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.