Blanchard vs Barrick

September 23, 2003

Judge Reginald C. Lindsay of the US District Court in Boston signed his Memorandum and Order on Defendants' Motions to Dismiss in Howe vs BIS on March 26, 2002, and already on April 1, James Turk wrote in his Freemarket Gold & Money Report, that Reginald H. Howe's complaint of gold price fixing was dismissed...

...not because the Defendants didn't manipulate the price of gold. Rather, the case was dismissed for a reason that I consider to be a technical matter. The Judge said that Reg did not have standing.

To explain this point, the Judge states: "...there are many participants in the gold and gold derivatives markets who could allege a more direct injury than does the plaintiff. For example, there are many gold mining companies and private investors in gold (not to mention those central banks with gold reserves) that the plaintiff does not allege to be involved in the conspiracy. All of these persons or entities would be more directly injured than the plaintiff by a scheme of the kind he alleges."

In Judge-speak, there are "more appropriate plaintiffs" than Reg. And as if his point is not sufficiently obvious, he says further: "it seems clear that there is sufficient incentive for any of the many gold mining companies or private investors in gold or gold derivatives to bring suit."

Will the gold industry please stand up? In this remarkable statement the Judge is giving us here an open invitation for a gold mining company to take over Reg's complaint and his allegations of price fixing. Is there a gold mining company out there to whom Reg can pass the baton?

-- unquote -- Howe vs. BIS

Three months later an opinion in opposition to that strategy was published at Gold-Eagle by very truly yours in Focus on Strategy:

-- quote --

It would not serve any good purpose to receive Judge Lindsay's decision of March 26, 2002 in Howe vs BIS with anything but magnanimity. Merriam-Webster's Dictionary defines magnanimity as "loftiness of spirit enabling one to bear trouble calmly, to disdain meanness and pettiness, and to display a noble generosity".

In this spirit we should have no difficulties to grasp that when Judge Lindsay upheld the sovereign immunity of gold price manipulators, he in effect said that the proper remedy of the people aggrieved by such misdeeds lay not at law but in the realm of politics. Translated into colloquial format, the underlying message of his decision reads:

 

"You the people should not try to force administrative officials to correct their discretionary policies by suing them. Such an approach in effect merges the administrative branch of the government into judiciary one, and forces the judges to second-guess administrative decisions rather than to interpret the law. Because you have the power to elect public officials, you should not ask me, a trial judge, to tell them what to do; if you are not happy with their policy, you should throw them out of their offices in the next elections instead. And if you are unable or unwilling to do it, you deserve what you are getting. Don't ask me to pick up chestnuts from the open fire for you! Put your own fingers at risk!"

 

In this generous interpretation, Judge Lindsay's decision means that our attention should be focused on electing honest-money President and honest-money Congress, and we should allow no one to distract us from this objective...

 

Most emphatically, no effort should be made to relitigate gold price manipulation as a class action of gold mining companies against bullion banks, because two more years down this road, in the election year 2004, sovereign immunity will be invoked again. What the bullion banks need to do to avail themselves protection of the sovereign immunity veil all over again is to tell the truth:

 

"We are manipulating the price of gold upon request of Secretary of the Treasury and of the Chairman of the Federal Reserve Board as their agents and assigns, we are merely executing the policy of the President of the United States."

 

-- unquote -- Focus On Strategy

 

When James Turk quoted Judge Lindsay's conclusion on the issue of sovereign immunity...

 

"For all the reasons set forth above, I conclude that Greenspan, McDonough and the Secretary of the Treasury in their official capacities are not 'persons' within the meaning of the antitrust laws. They enjoy the protection of sovereign immunity."

 

...he labeled it "ghastly", and went on to say:

 

"In other words, they are above the law. You can only sue them if they first allow you to sue them. Now where did the Founding Fathers put that clause in the Constitution?"

 

The sovereign immunity rule, meaning "you may not sue the King", is older than any constitution on this planet. There was no need to insert this rule into US Constitution for it was already the law of the land ever since the year of Jamestown. The number of years that elapsed from the year of Jamestown landing to the year of ratifying US Constitution was exactly the same as the number of years that elapsed from the year of ratifying US Constitution to the year of the inauguration of President Nixon administration. That's quite a few years, and in all those years, the colonists could not sue their King. Only the laws that were changing the existing law of the land needed to be asserted in the Constitution.

 

Reginald H. Howe was trying to use the umbrella of the Administrative Procedure Law, which waives sovereign immunity of the United States to allow judicial review of cases involving the abuse of administrative discretion, but that blanket statutory waiver was clearly inapposite here.

 

Judicial review of administrative discretion is appropriate only when administrative discretion is narrowly defined, and decision in question is found to be non-conforming. When the statute says that administrative official must do this or that and administrative official is doing something else, the aggrieved person may sue to obtain judicial review, and, when appropriate, an order in the nature of the writ of mandamus, directing the official in question to do what the applicable statute requires him to do.

 

But when particular area of administration is entrusted to full discretion of the official in charge, without defining in detail how his discretion is to be exercised, no one can sue to change direction of the policy pursued by such an official. If judicial review of all administrative decisions was allowed, all administrative officials, including the President of the United States, would end up standing in line at the nearest District Court, seeking permission for routine daily affairs of their offices. If we the People are dissatisfied with the policy direction, our remedy is to vote the offending officials out of office, not to ask the court to tell such officials to change their policy for us.

 

To make the long story short, judicial review of abuse of administrative discretion applies only to administrative acts where the official has no discretion to speak of, and must do as told by the applicable regulations; but when the official is not told by the applicable regulations what to do, and is free to act as he chooses, courts may not step in and second-guess his decisions.

 

Of course, I did not argue this point in my Amicus Curiae Argument - Focus On Strategy- for that was the job of the attorneys for the defendants. The purpose of my argument was to bring to the court's attention the unheard of and downright scandalous accounting system that was conspiratorially introduced by a certain Committee on the Global Financial System (CGFS) in the form of Data Template on International Reserves and Foreign Currency Liquidity, a proposed amendment to IMF voluntary reporting system known as Special Data Dissemination Standard (SDDS). The amendment failed, when 7 out of 49 governments subscribing to SDDS refused to adopt it. As a result, the rejected Data Template now functions as a different standard, parallel to SDDS, under IMF disclaimer in bold print. The sole purpose of this Data Template is to throw the veil of legitimacy over a common fraud that is being perpetrated by a group of conspiring central banks. In view of the fact that CGFS takes its orders from G-10 central banks, depositions from Messrs Alan Greenspan and William J. McDonough were argued as indispensable for untangling this web of conspiracy. Granting their motions to dismiss would operate to keep all these shadowy machinations secret.

It is this Data Template on International Reserves and Foreign Currency Liquidity that allows for selling central banks gold in exchange for US Treasury bills, notes and bonds while showing it as still remaining on central banks books as the existing gold reserves.

 

Focusing the court's attention on that Data Template fraud was of crucial importance, for it supported the alternate basis for suing the government officials. We have just explained that they cannot be sued when they enjoy full, unrestricted scope of administrative discretion, as opposed to limited, strictly defined discretion.

 

However, the government officials enjoying general, unrestricted administrative discretion can still be sued to challenge their decisions in the office if the offending decision is either based on unconstitutional statute or falls beyond the scope of the valid statutory powers of their office. This is known as Ultra Vires doctrine. It has been duly argued by the plaintiff, Reginald H. Howe. Amicus Curiae Argument merely supplied additional, very specific reasons for invoking this doctrine.

 

While Secretary of the Treasury has general unrestricted authority to "deal in gold, foreign exchange, and other instruments of credit and securities", he does NOT have authority to give national gold reserves away without consideration. Only Congress may have this authority. Furthermore, that give-away of national gold reserves was concealed from Congress by a bogus, extra legal and clearly contrived "authority" of the Data Template on International Reserves and Foreign Currency Liquidity.

 

In the honest trial, jury rules upon the questions of fact, and judge rules upon the questions of law. When judge becomes the sole trier of fact, with authority to bypass legitimate inquiry into the merits of the complaint, a star-chamber justice system immediately comes to mind. Only the jury may validly answer the question of fact whether or not a particular public official had arrogated to himself a non-existing authority.

 

Right from the beginning, the Amicus Curiae Argument focused on the fact that the trial by jury in the federal justice system was a myth that flew in the face of Justice Department's own statistics, and for this reason allowing the case to proceed into discovery stage was necessary and proper to prevent star-chamber dismissal on incomplete or even nonexistent evidence.

 

-- quote --

 

1. Most people believe they are entitled to have their civil claims adjudicated before the jury of their peers. They are, but only if their complaints survive the motions to dismiss, and most of them do not.

 

2. During the 12-month period ending September 30, 2000, United States District Courts terminated 215953 civil cases. (Additional 43281 civil cases that were terminated without court action - settled, withdrawn or otherwise discontinued - are not included in this number.)

 

3. Of these 215953 court terminated cases, 189808 cases (87.89%) were terminated before pretrial, 20365 cases (9.43%) during or after pretrial, and 5780 cases (2.68%) during or after trial.

 

4. If the defendants motions to dismiss are granted, the case at bar will fall into the 87.89% of the cases which are terminated before pretrial proceedings. Once this happens, in order to restore its status quo ante the case at bar will have to be appealed to the First Circuit Court of Appeals and then remanded to this Court for discovery and trial.

 

5. In the same 12-month period ending September 30, 2000, United States Courts of Appeals adjudicated 19088 civil appeals. Only 286 of those appeals were remanded.

 

6. By taking the most generous position, and counting all these 286 remanded appeals against the base figure of 189808 cases terminated before pretrial, we arrive at the incredulous statistical fact:

 

If terminated on motions to dismiss, the case at bar would stand only one chance in 664 to be remanded by the Court of Appeals back to this Court for discovery and trial. In other words, once dismissed the odds would be 0.15% against 99.85% for this case ever to see the light of day again.

 

In reality, these odds are 0% against 100%, because the appellate courts never second-guess the findings of fact made by the district courts, which means that none of those 286 remands can in good faith be counted against 189808 cases terminated before pretrial.

 

7. It was this statistical fact - derived from www.uscourts.gov/judbus2000/contents.html - that the summary dismissal of the plaintiff's complaint before pretrial is for all practical purposes final - has prompted this most unusual request for permission to file amicus curiae brief at this point, instead of at the appellate level where it ordinarily belongs.

 

8. Taking this statistical fact into consideration, and the fact that countless millions of lives will for generations be adversely affected by the dismissal of this complaint, THIS COURT SHOULD RULE OUT TERMINATION OF THIS CASE UPON MOTION TO DISMISS BEFORE PRETRIAL. Once a fair, in-depth inquiry into the merits of this case will take place in the course of discovery procedures, ALL THESE MOTIONS TO DISMISS MAY BE RENEWED on far better evidentiary basis.

 

9. Because the denied motions to dismiss can be renewed at subsequent stages of the civil procedure, and for this reason their initial denial does not carry the consequences of res judicata, the aim of all defendants memoranda to assure that the motions to dismiss are granted before pretrial is obviously calculated to protect the information genie from leaving the bottle of secrecy, rather than to prevent injustice without review.

 

--unquote -- Amicus Curiae Argument

 

In its conclusion, the Amicus Curiae Argument stated:

 

"No one is asking this Court to lead a revolution. All that is needed is a very narrow decision of caution that in effect says: In order not to make irreversible decision of incalculable consequences without sufficient knowledge what is really involved here, we need to shed more light on the background of this case.

 

"MOTIONS TO DISMISS DENIED WITH LEAVE TO RENEW UPON COMPLETION OF DISCOVERY."

 

The jurisdictional point could not be made any more explicit than it was made in paragraphs 47 and 48 of the Amicus Curiae Argument:

 

-- quote --

 

47. When Secretary of the Treasury swaps this nation's gold for US Treasury securities, to be sold into the market and never seen again, this only amplifies the true nature of the fiat dollar regime as administered by the Federal Reserve System. If the collateral securities were originally issued in exchange for gold coins, exchanging them now for gold bullion reserves would be a fair deal. But they were issued in exchange for de facto counterfeited money whose apparent value comes directly from diluting the value of money already in circulation. These securities represent US Treasury's solemn undertaking to repay the unearned money, created out of thin air by computer entry at the Fed, in completely different money, the earned money, earned by Regular Joe and Plain Jane in the sweat of their brows.

 

48. The resulting looting of this nation's gold by exchanging it for Treasury's IOUs, is not any different than looting of the available cash from the Social Security trust fund in exchange for similar IOUs. In both cases, the issuer of the IOUs does not have now, nor will have in the future, any assets other than those taken away from the taxpayers, which means that the owners of the looted assets will be asked in the future to pay for the replacement assets one more time with their new earnings. And Secretary of the Treasury does not even keep a record of Treasury's securities which are sold through the banks and Fed-anointed Primary Dealers.

 

-- unquote -- AMICUS CURIAE ARGUMENT Part II

 

Thus when Judge Reginald C. Lindsay of the US District Court in Boston decided Howe vs BIS in direct opposition to this argument, he in effect said:

 

"I know this is a prima facie case of criminal conversion of this nation's property without Congressional consent, which makes the perpetrators liable under Ultra Vires doctrine, and yet for my own reasons I have decided not to allow any further inquiry into this matter in order to preclude a jury pronouncement upon it, for such a pronouncement would in effect serve as an indictment of the entire Federal Reserve system as a quasi criminal syndicate, which in turn would force Congress to revoke its charter."

 

Then, one year and five months later, in a lightning out of the blue sky on September 3, 2003, the court reversed itself and made the ruling we have been asking for:

 

"...the Court declines to consider this potential issue until discovery sheds more light [upon] the nature and extent of the interests involved. Defendants may then re-urge dismissal of this remedy if necessary and appropriate."

 

Only...

 

... it was the ruling of Judge Helen G. Berrigan of the US District Court in New Orleans, not the ruling of Judge Reginald C. Lindsay of the US District Court in Boston, for...

 

... on December 18, 2002, Blanchard & Company, Herbert Davies, and James F. Holmes (plaintiffs) filed a law suit in the United States District Court for the Eastern District of Louisiana against...

 

Barrick Gold Corporation, JP Morgan Chase & Company, and ABC Companies (defendants).

 

In their complaint, the plaintiffs sought:

 

1. Injunctive relief terminating "all Master Trading Agreements, spot deferred sales contracts and all other contracts through which Defendants manipulate the market for gold";

 

2. Damage awards in compensation for each of Plaintiffs' particular injuries; and

 

3. An award trebling those damages pursuant to the Sherman Act and Clayton Act.

 

[For the sake of clarity, peripheral claims are omitted here.]

 

In her order of September 3, 2003, Chief Judge Helen G. Berrigan, denied Barrick's and J.P. Morgan's motions to dismiss, thus allowing Blanchard's action to proceed into discovery stage.

 

The key consideration in her decision was "The Act of State Doctrine", and this is how she disposed of this issue:

 

"... Specifically, Barrick argues that because the mechanics of the Premium Gold Sales Program involves the leasing of gold from various national central banks the act of state doctrine precludes judicial intervention. The Court disagrees.

 

"The act of state doctrine proscribes "the courts of one country [from sitting] in judgment on the acts of the government of another done within its own territory." [citations omitted] Barrick contends that the merits of Plaintiffs' claims cannot be decided without running afoul of this doctrine and "instructing a sovereign to alter its chosen means of allocating and profiting from its own valuable natural resources."

 

[Barrick's "Hunt vs Mobile Oil Corp" argument omitted, because the Court found the Blanchard case distinguishable.]

 

"Plaintiffs' complained-of antitrust injury involves a conspiracy between Defendants to artificially manipulate the price of gold.

 

"First, although the mechanics of the alleged manipulation involves leasing gold from foreign sovereigns, the sovereigns themselves are not implicated in the conspiracy nor is the complained-of antitrust injury attributable to the foreign sovereigns' acts. An injunction prohibiting Defendants from entering into similar contracts in the future would not prevent any central bank from leasing gold, and the Court would not be impermissibly encroaching on the discretion of a foreign sovereign to manage national assets. Rather, the prayed for injunction would merely prevent the Defendants from further participation in the challenged Premium Gold Sales Program between themselves.

 

"Second, the Court is cognizant of the fact that "an injunction terminating all master Trading Agreements, spot deferred sales contracts and all other contracts through which Defendants manipulate the price of gold" may implicate contractual obligations and interests of the central banks. [...] Thus with respect to this prayer for relief, Plaintiffs' claims may be impacted by the act of state doctrine. However, the Court is not prepared to dismiss this action altogether at this stage in the proceedings simply because a prayed for remedy might be inappropriate. Discovery will shed light on the Premium Gold Sales Program and the associated interests of the central banks with respect to the existing contracts between the Defendants. If the relief requested impermissibly encroaches upon the discretion of a foreign to manage its national assets then the remedy may have to be precluded or adjusted."

 

In the footnote to this paragraph, Judge Berrigan wrote:

 

"The Court appreciates that termination of the existing contracts between the defendants might jeopardize the various central banks' ability to recover gold which they have leased. However, the Court declines to consider this potential issue until discovery sheds more light [upon] the nature and extent of the interests involved. Defendants may then re-urge dismissal of this remedy if necessary and appropriate."

 

All 36 pages of Judge Berrigan's order can be read at www.gata.org/Blanchard_v_JPM_Order_9_3_03.pdf

 

Now, the question before us is, what difference will it make when Barick and JP Morgan will tell to the court stenographer, i.e., to the whole world, about their gold price manipulations?

 

And the reverse of this question is, how do we know this is not a setup?

 

Remember when Blanchard notified its sixty thousand customers it would cease to carry gold inventory from 1 January 2002, and advised them to sell their gold for tax loss in order to buy it back when the price went below $200?

 

I am still willing to give Blanchard's CEO, Donald W. Doyle Jr, the benefit of a doubt, and to write that episode off as a bad call rather than to dwell on it as a deliberate betrayal at gold's time of need, for our thoughts can only gain from the Ockham's Razor imperative to reduce our assumptions to the very minimum. (In Albert Einstein's rendition, the same imperative reads, "Things should be as simple as possible, but not simpler", and in computer hackers Hanlon's Razor rendition, it reads, "Never attribute to malice what can be explained by stupidity".)

 

For all we know, Donald W. Doyle Jr may have simply been unable to grasp what Professor Harry Johnson announced in his "Should Gold be Scrapped" address to the Empire Club of Canada in response to President de Gaulle's challenge, that gold's post-Bretton-Woods role was to be "a commodity especially suitable for the conducting of intervention operations in foreign exchange markets." See: How The Fiat Money Is Being Defended? - Part 1

If Donald W. Doyle Jr could see that euro was nothing else but the Eurodollar held by London bankers that was skillfully repackaged to make it desirable for Europeans (so they would cooperate in their own enslavement), he would have understood that the "strong dollar" (obtained by manipulating gold price down) would only be needed until Europeans actually exchanged their national currencies for euro, i.e., until early 2002. In other words, Donald W. Doyle Jr has committed his Hanlon's Razor offense just weeks before "strong dollar" ceased to be necessary and gold price reversed its direction.

"Strong dollar", overvalued as much as one-third, created a boom conditions in export dependent Euroland industries, and thus prevented last-minute bail-outs from euro. But once Euroland's national currencies were turned into a pulp in the local paper mills, weakening dollar (obtained by strengthening the price of gold) began to discipline "Eurols" into the idea of â‚$Â¥, the new super-currency of the world.

From $277.90 on January 29, 2002, when gold price reversed its direction, to $345.00 on December 19, 2002 (the day after Blanchard versus Barrick law suit was filed) gold rose 24.15%. For Donald W. Doyle Jr that was reason enough to sue Barrick and J.P. Morgan. No other challenge was necessary. In fact, suing Barrick and J.P. Morgan was very expedient method for Blanchard to redeem its reputation in the eyes of gold community.

Where is the setup then?

It's it in the court's decision.

Why would the District Court in New Orleans render a decision that was 180 degrees different than that of District Court in Boston?

In the Motion for Reconsideration of the Order Denying Motion to Dismiss, that is scheduled for oral argument before Chief Judge Helen G. Berrigan on October 15, 2003, attorneys for Barrick Gold Corporation argue (and attorneys for J.P. Morgan adopt this argument by reference in their motion) that Judge Berrigan's Order denying defendants Motion to Dismiss...

-- quote --

(1) appears to have made findings of fact based upon evidence and sources other than the Complaint, notwithstanding that the only issue raised by the Motion is whether the Complaint states a cause of action; and

(2) relies upon various holdings that are at odds with well-established principles of antitrust law. For example, and perhaps most importantly, the Order relies upon myriad findings regarding the purportedly "unique" nature of gold, without citation to the Complaint. In fact, some of the fundamental finding on which the Order relies find no support in the Complaint. Yet, these findings provide the foundation for the Court's conclusions that the antitrust laws are applied differently to transactions involving gold than to transactions involving other commodities.

-- unquote --

To make the long story short, Barrick and J.P. Morgan contend that Judge Berrigan went beyond the plaintiffs Complaint and dug out anything she could find to make the case against them stick.

In conclusion they request... "that the Court amend its Order and dismiss the antitrust claims, or, at a minimum, amend the Order to correct the errors discussed above."

What is that "minimum" they want, even if the case goes to discovery?

The Order should be clarified to confirm that the Predatory Pricing claim has been dismissed.

Evidently, Judge Berrigan indicated she was excising Predatory Pricing claim from the case, but the final order does not contain specific provision to that effect. Barrick and J.P. Morgan are concerned that "[l]eaving this claim in the case, assuming that Plaintiffs are allowed to proceed on their antitrust claims, could require the parties to engage in significant discovery that would otherwise be unnecessary."

Also, "...the impact on competition of Barrick's forward sales program cannot be held to be so unambiguously negative that per se treatment is warranted. For this reason, [they respectfully request] that the Court, at a minimum, amend its Order to make clear that the transactions at issue are subject to rule of reason, not per se, treatment." (Again, the concern is discovery consequences.)

Assuming that after October 15th hearing the Order of Judge Berrigan stands, and Barrick and J.P. Morgan executives are forced to tell the whole world all they know, what difference will it make?

None whatsoever!

In Howe vs BIS, the impact of discovery would have been truly immeasurable, in Blanchard vs Barrick, it will be nothing but the proverbial bean counting, interrupted only by the usual deliveries of the truckloads of computer printouts that may require years to read.

Why do it then, assuming it's a setup? Why not dismiss the complaint on the spot out rightly?

In order to sustain the myth that there are honest judges willing to confront the establishment head on, and that the system is not the organized crime racket it appears to be.

10 karat gold is 41.7% pure gold.