- WHO DOES IN-Q-TEL REALLY WORK FOR?
How a rogue spy company sells CIA services as domestic "hit-jobs" on political enemies of American companies and businesses, INSIDE AMERICA. If You thought the LOIS LERNER hit-jobs were audacious, check out In-Q-Tel's rip-and-run tactics.
The problem is, it is a felony for CIA officials to support ANY activity against U.S. Citizens for political attacks.
THE SPY AGENCY SHOULD CLOSE ITS VENTURE CAPITAL FIRM
"...to a Senate confirmation hearing, one of the panel's members should ask him this:
"Sir, please tell the committee how much further you anticipate allowing the CIA to expand its presence on Wall Street via the private venture capital firm known as In-Q-Tel, Inc."
Hayden came under withering fire in Washington last week as word spread that the ex-NSA chief had presided over the White House's post-9/11 surveillance program of monitoring domestic U.S. telephone calls. The White House, politically weakened from a year of setbacks both at home and abroad, may decide to withdraw Hayden from consideration and submit an alternative nominee burdened with less civil liberties baggage.
Yet whoever winds up in the CIA's top job will inherit a developing mess involving In-Q-Tel that was largely ignored by the agency's departing director, Porter Goss. Hints that all is not well with In-Q-Tel have begun seeping into view as this little-known domestic CIA front operation continues to funnel agency money into penny stock and micro-cap companies in Wall Street's murkiest back alleys.
Two In-Q-Tel CEOs have resigned from the six-year-old venture capital fund in just the last four months; the fund is being run on a day-to-day basis by a man from Washington's politically greased Carlyle Group who has been with In-Q-Tel for only a few weeks. Headhunters are said to be having trouble coming up with candidates for a permanent replacement.
And there are even reports, largely unconfirmed, that the Securities and Exchange Commision is looking into several penny stock promoters with ties to In-Q-Tel.
Launched in 1999 by CIA director George Tenet as a Wall Street venture fund to finance new technologies for the spy world, In-Q-Tel quickly found friends on Capitol Hill, where policymakers seized on the fund as a way to remind constituents that the ghost of Vietnam no longer walked the land. The attacks of 9/11 gave In-Q-Tel even more stature in Congress, where the fund came to be seen as an essential element in the war effort.
Yet the public's visceral reaction to last week's NSA revelations suggests that war or no war, a backlash against government snooping may be starting. And that in turn promises to crank up the heat under In-Q-Tel, where at least some of the fund's investments raise questions of judgment regarding how taxpayer money is being spent by the organization, as well as who it is choosing for business partners.
A year ago, this column drew back the curtain on a fishy In-Q-Tel investment, financed out of the black box budget of the CIA, in a defense-sector start-up called Ionatron Inc.
Run by a longtime Wall Street regulatory violator named Robert Howard, Ionatron used a cash infusion from In-Q-Tel to promote itself around Washington as the developer of a laser-equipped, remotely controlled device the size of a golf cart that could patrol the highways of Iraq, ferreting out and detonating insurgent land mines ahead of troop movements.
We warned in this space that the technology being trumpeted by Ionatron was not only unproven, but had been obtained by Howard and some midlevel researchers at Raytheon Corp. under highly irregular circumstances designed to persuade a West Coast laser researcher into turning over his research to Howard's group.
Nonetheless, Sen. Hillary Clinton and her Democratic colleague from California, Barbara Boxer, quickly embraced the Ionatron program, which eventually devoured more than $12 million in government funding before the Pentagon finally concluded last week that the devices are not reliable and cancelled plans to deploy them.
Ionatron's stock price has tumbled more than a third in the last three weeks, leaving the company's largest investor - prominent hedge fund SAC Capital Advisors, run by Steven A. Cohen of Connecticut - sitting with millions in paper losses.
SAC Capital has acknowledged that it is under investigation by the SEC in what appears to be a separate matter involving stock trading, and the SEC may soon start taking a look into the hedge fund's buying of Ionatron's shares.
In-Q-Tel's growing portfolio of investments includes a few successes. Yet the fund has more often poured money into companies that were barking dogs long before In-Q-Tel showed up, and have failed to improve since.
Consider a North Carolina outfit called ID Technologies Corp., which began life in 1994 as CardGuard International Inc. to promote a fingerprint identification system no one wanted to buy. In the four years that followed, the company racked up losses of $3 million on a mere $92,000 in revenues.
In 1998, the company changed its name to ID Technologies and added $2.5 million more to the loss column on barely $100,000 more in revenues.
Along the way, In-Q-Tel popped up with plans to invest $400,000 more in ID Tech, but the firm collapsed, leaving investors with $5.58 million in cumulative losses and a stock that now sells for a fraction of a penny per share.
Another In-Q-Tel investment, in a data software company called Convera Corp., may be headed in the same direction, bearing much greater losses. In 2004 the fund took a stake in Convera, which had yet to turn a profit while piling up more than $1 billion in cumulative losses since its founding in the mid-1980s.
By the end of 2005, a resulting bounce in Convera stock had topped out at $16, and the shares have since lost half their value. Last week they were trading below $8 on investor disenchantment with the perennial money loser's latest offering: an Internet search engine for extracting information from video files.
Because its funding comes from the CIA, In-Q-Tel has been an irresistible target for conspiracy theorists who charge that the CIA is somehow linked through it to every penny stock that goes south.
Last week, one left-leaning Web site reported that SEC investigators think the CIA-backed venture fund has been steering money into penny stock "pump and dump" firms in Israel, Dubai and Malaysia.
But a day's worth of phoning around traces these claims to a tireless complainant named Tony Ryals, who has been bombarding the SEC and Internet message boards for years with claims that he has uncovered a submerged world of In-Q-Tel-linked fraud stretching for Kuala Lumpur to the Middle East.
The alleged linkages are bewildering in their complexity and typically impossible to follow, but conspiracy buffs find them irresistible, since they seem to echo some of the CIA's worst excesses from 30 to 40 years ago, and by their nature, they can never be entirely disproved.
WHETHER the SEC has looked into Ryals' charges and found them baseless isn't known, but thanks to In-Q-Tel and the lengthening shadow of the CIA on Wall Street, the most improbable of such claims once again have a whiff of credibility.
Bottom line: There are many sensible ways the CIA could have gone about developing the technologies it needs, but funneling money into Wall Street via an outfit like In-Q-Tel was never one of them. So it will be a good thing for Wall Street - and for America, too - if the CIA's next spymaster simply shuts the operation down. firstname.lastname@example.org
“IN-Q-TEL PASSES THEIR FAVORITE “ACQUISITIONS” OFF TO THEIR SISTER “FRONT-ORGANIZATION”: NEW AMERICA FOUNDATION, WHICH, IN LARGE PART IS, ITSELF, A FRONT FOR OBAMA ADMINISTRATION LOBBYING.
IN RECENT CASES, IN ORDER TO DAMAGE AN OBAMA ADVERSARY, IN-Q-TEL WOULD ASK TO LOOK AT A COMPANY TECHNOLOGY UNDER THE SUBTERFUGE OF “CONSIDERING AN INVESTMENT”, COPY IT AND FLOOD THE MARKET IN ORDER TO KILL OFF THAT COMPANY, THAT THE WHITE HOUSE DID NOT LIKE”
” – SENIOR PENTAGON INVESTIGATOR
Here is how IN_Q_TEL'S SISTER GROUP loves digital warfare:
The Future of War (I): A New America project looking at 21st century conflict
• BY THOMAS E. RICKS
In the interest of improving our national security, protecting our rights, and helping get us out of the endless "war on terror," the New America Foundation is launching a project on the future of war. Here is a look at the initial thinking, which is liable to change as our various participants bring to bear their very different areas of expertise.
Plus, isn't it time that there was a study of the future of defense funded by neither the Pentagon nor the defense industry?
By the Future of War team, New America Foundation
Best Defense office of the future
Throughout history, changes in the conduct of warfare have been one of the primary drivers of shifts in how societies and states are organized. Today, the evolution of autonomous weapons systems, the emergence of ever more sophisticated surveillance technologies, the militarization of cyberspace and outer space, and a range of similar developments are dramatically changing the nature of war -- with profound implications for the nature of the international order, the manner in which we control and constrain power and violence, and the nature of the state itself.
Few seem fully to grasp this, however. For the most part, these changes in the means and methods of warfare are usually viewed narrowly, and understood as matters of interest mainly to specialized communities of policy wonks, military planners, civil libertarians, or counterterrorism experts. As with the story of the blind men and the elephant, many people are looking at different facets of the changing nature of war, each trying to describe what they see (and often misunderstanding what it is they are seeing). That's not good enough: We need to look at the whole elephant.
With the United States still locked into a "forever war" paradigm that doesn't comport with American values or history, it's more urgent than ever to understand the ways in which changes in the nature of war both drive and are driven by changes in state-level, sub-state-level, and international policies and institutions. At the same time states are developing unprecedented military technologies, the means of mass destruction have been democratized: Today, terrorist organizations and other non-state actors can cause damage and destruction on a scale we normally associate with states. Meanwhile, new technologies are eroding old assumptions about sovereignty and state autonomy. Nonetheless, we still operate mainly within a legal and political paradigm that draws sharp -- if increasingly arbitrary-- lines between domestic and international matters, between states and non-state actors, and between war and crime.
It's increasingly apparent that existing legal paradigms neither provide adequate tools for responding to new kinds of threats nor offer an appropriate framework for protecting human rights and human dignity. As we move forward, we need to find a way to evolve beyond the post-9/11 state of perpetual war -- and we need to do so in a way takes into account these seismic changes, allows for an adaptive response to evolving threats, and enhances the robust protection of human rights.
The New America Foundation is well positioned to sort out the thorny issues that arise from the changing nature of warfare. Unlike most think tanks and NGOs, New America isn't made up of specialists having "insider" conversations with one another: lawyers talking to other lawyers, or defense policy experts talking to other defense policy experts. Instead, New America connects the worlds of law, technology, political science, history, policy, the military, the human rights community, and the media, each of which often operates in isolation.
Core members of New America's Future of War team include journalists, technologists, military history and terrorism experts, human rights experts, and international law and defense policy experts. Our individual and collective expertise and connections enable us to convene the most creative and influential thinkers, writers, and decision-makers from these varied and often separate worlds; develop bold conceptual frameworks combined with more specific legal and policy proposals; write and talk about these intelligibly and interestingly; and attract extensive media coverage to our work and our recommendations.
The Future of War project is led by Peter Bergen, director of national security studies at the New America Foundation and the author of several books. This series was drafted by him and the team's other members: Rosa Brooks, Anne-Marie Slaughter, Sascha Meinrath, and Tom Ricks.
HERE IS HOW IN-Q-TEL STEALS U.S. CITIZEN'S TECHNOLOGY WITHOUT PAYING FOR IT:
Small businesses claim US government stealing their ideas
By Eric Shawn
"They stole all my stuff and used taxpayer money to do it," John Hnatio, a Maryland small business owner, says of the U.S. government.
Hnatio claims the government has put his company, FoodquestTQ, nearly out of business by stealing his firm's software that was designed to be licensed to the Food and Drug Administration to monitor food safety.
The FDA "took our ideas, plagiarized my doctoral dissertation on which a patent was based, and then they infringed on our patent. The result was that it decimated our business," he adds.
Hnatio says his company has been left hanging by a thread. He has had to fire employees and says that the remaining three, including himself, are receiving no salary and have been forced to go on unemployment insurance.
"I have never seen anything like it," says Hnatio, who is a retired federal government official.
He says the FDA "duplicated exactly what we were selling to industry and they were giving it away for free...instead of helping small business commercialize their product, what we are seeing is a dragon, in the name of the U.S. government that is eating their own young."
FoodquestTQ is only one of numerous small businesses that accuse the government of stealing their intellectual property or trade secrets when they enter into contracts or research agreements with federal agencies.
"The government interceded, stole the technology and attempted to use this in classified programs," says Jim O'Keefe, the president of the small New Jersey technology company Demodulation. He has filed a $50 million lawsuit against the U.S. government, accusing it of taking his firm's research.
Demodulation developed an advanced technology involving fiber coated wire, called microwire, which is thinner than a human hair. The company says its microwire can be used for a variety of national security applications, such as tracking drones, keeping tabs on soldiers on battlefields, transmitting information without a power source, and that it even has the ability "to render objects invisible to radar."
"It sounds incredible and impossible that the U.S. government is taking things from people," says Demodulation lawyer Sean Callagy. "We believe this is the greatest country in the world with the greatest justice system in the world but the U.S. government is not an eagle or a flag, but human beings. And human beings make mistakes."
The lawsuit accuses the Department of Energy and the National Nuclear Security Administration, among others, of illegally swiping the firm's information by "using microwire and Demodulation's trade secrets in its mission to gather intelligence."
It also says that the U.S. has even built "a secure facility for the production of microwire" on its own.
"There are classified reports showing the technology," declares Demodulation attorney Ben Light, who says that after the company "shared the secret sauce" about microwire with federal officials, they simply "took (the) wire."
The Department of Energy referred Fox News’ requests for comment to the National Nuclear Security Administration, which did not respond to repeated requests for a comment about the company's allegations.
The Department of Justice denies Demodulation’s charges in court filings.
Stuart Delery, an Acting Assistant Attorney General, wrote that while "the United States admits that it continues to conduct research regarding what is generally known as 'microwire," he says that the government did not act improperly.
The Department of Justice claims the government did not take any proprietary information or develop the microwire technology based on Demodulation's work, and that "none of the asserted patents have been infringed on by the United States."
Delery also pointed out that some of Demodulation's patents had expired.
"The only reason the patents expired is because Demodulation was driven out of business," responds the firm's lawyer, Light. "It doesn't affect the entire case because any infringement during the period when the patents were enforced is still compensable."
O'Keefe says the government denials are "an impossibility based on the evidence I have."
He is calling for "reform and legislation to protect us. I hope through our litigation we will be able to expose some of the problems."
It turns out that the government is routinely accused of similar wrongdoing and sometimes has to pony up.
The U.S. Army settled a case in November by paying $50 million to a Texas company, Apptricity, which claimed the government took some of its software, which tracks military equipment from MRE's to troops, without paying for it.
The company's court papers said that the government "willfully infringed" on its copyrights, "failed to provide information" about what it did and was engaged in "actively concealing the Army's misappropriation of Apptricity software."
The complaint said the Army paid for using the software on five servers and 150 devices, but actually "copied and installed Apptricity software on at least 98 servers and at least 9,063 devices" without telling the company.
"I don't think there was malicious intent," Apptricity's founder and president Tim Garcia tells Fox News in the aftermath of the settlement. He says his company pursued its case by the "standard process through the Court of Claims."
There are numerous other companies that have filed similar actions at the Washington, D.C.-based court, which is the venue for legal claims against the federal government. Among them:
Liberty Ammunition, which is suing the government for allegedly infringing on its copyright for developing a lead-free "green bullet" after it worked on the invention with the Department of Defense.
Net Results, which claims that the Army infringed on its patent for a "mine detecting device" by giving out its design to six other government contractors.
In 2009, NASA was ordered to pay $28.3 million to Boeing after the court found that the government infringed on the company's aluminum alloy patent.
In a noted case in 1999, the U.S. government paid then Hughes Electronics $154 million in damages after a 30- year long legal battle found that the government illegally appropriated the company's satellite technology.
The U.S. Court of Federal Claims calls itself "the people's court," and says it is considered "the keeper of the nation's conscience." It is situated right across Lafayette Park from the White House.
"There is no reason to think it can't happen," observes New York University law Professor Jeanne Fromer, an intellectual property and copyright law specialist.
"The government can take patent rights, as long as they compensate for it. It is not dissimilar, in that sense, to notions of eminent domain."
"The government is a big sprawling place and there are lots of people acting in it. I think some of them act very nobly...but it’s hard to say that everyone always does."
"We are hearing more frequently from companies about intellectual property theft by the government," notes John Palatiello, head of the Washington, D.C.- area lobbying group, the Business Coalition for Fair Competition, which is studying the issue.
"Companies are becoming more vocal about it."
Hnatio believes there is a troubling explanation for alleged government flinching.
"What we are seeing is a direct competition between the private sector and the U.S. government. The problem for small businesses is that they are simply being destroyed by their own government in spite of the fact that we hear politicians say all the time, that small business is important...it's extremely disturbing because it means we lose jobs, and it means we lose our competitive edge in the world. It creates a very dangerous situation for our national security."
Fox News repeatedly requested comment from the FDA regarding Hnatio's allegations about FoodquestTQ, but the agency did not issue a statement.
While the Demodulation case is expected to go to trial next year, Hnatio says he has been left without any money to hire a lawyer to go to court.
"From the time I was a little kid I dreamed of starting a business. But I do have to tell you that there is a grave danger to the American dream," he says.