Tuesday, 22 December 2015

Martin Shkreli fails the Turing Test

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Martin Shkreli posing with an Enigma Machine

FBI Arrest Pharma CEO Martin Shkreli In New York City.

Earlier this year, a couple of Blog readers asked me for my opinion of Martin Shkreli (b. 1983).


I replied that it was a safe bet that Mr. Shkreli would very soon end up in prison.

I went on to state that Mr. Shkreli (who is in his early 30s) is a tragicomic figure who looks, and behaves, like an absurd, swaggering adolescent who has learned how to fool adults by reciting impressive-sounding, technical jargon. 

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Simply by co-opting the name, 'Turing Pharmaceuticals,' for his latest company, Mr. Shkreli has attempted to identify with Alan Turing. In reality, for several years, he has been exhibiting the diagnostic criteria of severe and inflexible Narcissistic Personality Disorder,* but lately, Mr. Shkreli's ego-inflating, comic-book fantasies have become increasingly grandiose and dangerous. 

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Typically, Mr. Shkreli has also been posing as a victim.


‘Narcissistic Personality Disorder,’ is a psychological term first used in 1971 by Dr. Heinz Kohut (1913-1981). It was recognised as the name for a form of pathological narcissism in ‘The Diagnostic and Statistical Manual of Mental Disorders 1980.’ Narcissistic traits (where a person talks highly of himself/herself to eliminate feelings of worthlessness) are common in, and considered ‘normal’ to, human psychological development. When these traits become accentuated by a failure of the social environment and persist into adulthood, they can intensify to the level of a severe mental disorder. Severe and inflexible NPD is thought to effect less than 1% of the general adult population. It occurs more frequently in men than women. In simple terms, NPD is reality-denying, total self-worship born of its sufferers’ unconscious belief that they are flawed in a way that makes them fundamentally unacceptable to others. In order to shield themselves from the intolerable rejection and isolation which they unconsciously believe would follow if others recognised their defective nature, NPD sufferers go to almost any lengths to control others’ view of, and behaviour towards, them. NPD sufferers often choose partners, and raise children, who exhibit ‘co-narcissism’ (a co-dependent personality disorder like co-alcoholism). Co-narcissists organize themselves around the needs of others (to whom they feel responsible), they accept blame easily, are eager to please, defer to others’ opinions and fear being seen as selfish if they act assertively. NPD was observed, and apparently well-understood, in ancient times. Self-evidently, the term, ‘narcissism,’ comes from the allegorical myth of Narcissus, the beautiful Greek youth who falls in love with his own reflection.

Currently, NPD has nine recognised diagnostic criteria (five of which are required for a diagnosis):

  •       has a grandiose sense of self-importance.
  •       is preoccupied with fantasies of unlimited success, power, brilliance, beauty, ideal love, etc.
  •       believes that he/she is special and unique and can only be understood by other special people.
  •       requires excessive admiration.
  •       strong sense of self-entitlement.
  •       takes advantage of others to achieve his/her own ends.
  •       lacks empathy.
  •       is often envious or believes that others are envious of him/her.
  •       arrogant disposition.

In plain language, Mr. Shkreli is yet another mediocre (previously-penniless) little charlatan who has managed to get his hands on large sums of other people's capital by hovering around Wall St. and steadfastly pretending that he's an important, philanthropic, scientific and business, genius, who knows how to make piles of money lawfully.

Mr Shkreli has finally been arrested for running a Ponzi scheme and manipulating the market, revealing that the only possible connection he has with Alan Turing is that (when asked the right common-sense questions) he fails the Turing Test.  


Dr. Alan Turing (1912-1954)

Today, Dr. Alan Mathison Turing is universally recognised as a giant, but tragic, figure in history.

1931-1934, Alan Turing studied mathematics a Kings College Cambridge, graduating with a first class honours degree.

I935, Alan Turing (aged just 22) was elected as a fellow of Kings College. 

Alan Turing is the individual who, in 1936, set out and formalised the concepts which produced the Universal Turing machine - the first theoretical model for a general purpose computer. As a result, Dr.Turing is considered to be the father of computer science and artificial intelligence. The central principle of today's computers (i.e. controlling the machine's operations by a program of coded instructions stored in a memory) was Alan Turing's original idea.

(1936-1938) Dr. Turing studied mathematics and cryptology at Princeton University, obtaining a PhD in 1938.

During WWII, Dr. Turing (who had been talent-spotted and recruited by British Military Intelligence on his return to Cambridge in 1938) worked at the Government Code and Cypher School, Bletchley Park, where (by applying the principle that what can be constructed by a human mind: can also be taken to pieces another human mind) he developed various techniques for deciphering messages sent via the most-advanced version of the German 'Enigma' enciphering/deciphering machine. This electromechanical device (which had been in existence since the end of WWI), had previously been considered as completely secure. 

It is now a matter of historical record that, but for Dr.Turing, WWII would almost-certainly have dragged on at least until 1947.

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When the wider picture is examined, Dr. Turing and his Bletchley Park colleagues could not have succeeded, but for the groundwork of Marian Rejewski, Jerzy Rozycki and Henryk Zygalski of the Polish Cypher Bureau. With the help of German documentation recovered by French military intelligence, in 1932 these three brilliant, young mathematician/cryptologists, first reverse-engineered the original Enigma machine using theoretical mathematics. Mechanical devices were then developed for deciphering intercepted-Enigma-encrypted radio messages, but after 1938, German cryptologists took the precaution of vastly-increasing the complexity of Enigma machines by adding extra rotors, and the Poles did not have the necessary resources to counter this sudden advance. Consequently, fearing an imminent German attack on their country, in July 1939, Polish leaders and intelligence chiefs handed over to British and French Military intelligence agents (stationed in Warsaw), everything that Polish cryptologists had managed to achieve. Subsequently, all tangible traces of this initial breach in the security of Enigma, were destroyed.

The timely, secret transfer of Polish expertise saved neither Poland nor France from invasion, but it did enable Dr. Turing and his colleagues to develop a much more powerful, and rapid, electromechanical calculating machine capable of decrypting almost all intercepted, heavily-encrypted Enigma-messages. The resulting massive-flow of important up-to-date strategic intelligence that the British government and military, air and naval, commanders obtained via Bletchley Park, was itself given the code-name, 'Ultra' a.k.a. the 'Ultra Secret.' At various times during WWII, Winston Churchill felt obliged not to act on 'Ultra' intelligence for fear that, by doing so, German intelligence would realise what was occurring. However, even though the evidence of a near-total communications security breach often stared them in the face, the leaders of the 'Aryan Master Race,' and their partners in crime, were evidently incapable of accepting that almost every move they ordered to be made, was known by their inferior opponents, before it was made.  

Winston Churchill reportedly told King George VI, that 'it was thanks to Ultra, that we won the War.' However, the 'Ultra Secret' remained closely-guarded until the 1970s, when the techniques involved, finally became out-dated. 

After the war, Dr. Turing (who had acquired a reputation as a charming, but eccentric, loner, prone to dramatic swings of mood) appeared to return to his previous academic career, but he continued to work in secret for GCHQ (the successor to Bletchley Park and equivalent of America's National Security Agency).

Officially, in 1954, Dr. Turing (aged 41) committed suicide by eating part of an apple which he had injected, and/or coated, with cyanide poisonHowever, although cyanide was found in Dr. Turing's body and at his home, the remains of the apple (recovered from a bedside table next to his body), were never tested, and there are now a number of commentators calling for a full inquiry into Dr. Turing's enigmatic 'Snow White/ Wicked Queen'-style death; and particularly, to uncover what hidden role UK security services might have played.

In truth, Dr. Turing was effectively-executed in 1952 (aged 39), when he was arrested for, and convicted of, the (then) common criminal offence of 'gross indecency' (i.e. homosexual activity between consenting adults) and sentenced to chemical castration (i.e. as an alternative to a humiliating prison sentence, he was released on the condition that he accept female hormone injections for a period of 12 months). Given the fact that, in 1950s Britain, male homosexuals and  bisexuals, were often physically attacked as dangerous paedophiles, perverts and pariahs, and could, if convicted of 'gross indecency,' be imprisoned for life, the events surrounding Dr. Turing's arrest, have never been fully-explained; for he went to his local police station in Manchester to report that he'd been the victim of a crime, and gave an apparently reckless statement in which he openly-admitted that he'd been involved in a passionate relationship with a much younger man who turned out to be a thief.

Although, in 1952, very few people knew the extraordinary truth about Dr. Turing's central role in the defeat of tyranny, evidently, the British government (again led by Sir Winston Churchill) made no attempt to protect him and, instead, abandoned him to a fate which clearly he did not deserve. The fact that Winston Churchill partly built his own reputation in history by standing on the shoulders of intellectual giants (knowing that, for decades, they could not be given any credit), reveals his personal failure to intervene on behalf of Dr. Turing in 1952, to have been both morally-reprehensible and (surprisingly, for a Nobel Prize-winning historian) short-sighted. 

Werhner von Braun (centre left rear, in civilian dress)

What  Dr. Turing was forced to endure in silence, is almost unimaginable. Apart from the fact that (like thousands of other gay British men) he was punished for something over which he had no control, he must also of been fully-aware that, in 1945, a significant number of 'Nazi' scientists  - like ballistic missile inventor, Werhner von Braun (a member of the SS who designed Hitler's so-called 'revenge weapons' which caused death and misery to thousands of slave labourers, not to mention death and mutilation to thousands of British men, women and children) - had been allowed to escape all prosecution as war criminals, because the US government offered them amnesty in return for their expertise. Ironically, von Braun (who was born in the same year as Alan Turing), was already, in 1954, an important and wealthy man in the USA. Von Braun was even awarded the US National Medal of Science two years before his death in 1977 (but he was too ill to attend the presentation ceremony at the White House). Yet , even today, Dr.Turing's personal role in saving countless American lives and billions of dollars, has never been officially recognised in the USA.

Niels Bohr and Albert Einstein

In view of his own previous achievements (and his youth), Dr.Turing's unjust categorisation as a degenerate, could easily have been recognised by the British government as being contrary to national interests, for the 'Nazis' had caused many of Europe's most-brilliant thinkers (like Albert Einstein and Niels Bohr) to flee to the USA, because, as Jews, they were also unjustly categorised as degenerate. These same European scientists, first took a leading role in persuading the US Government to commit funds to develop the Atomic bomb - knowing that the 'Nazis' were already on the same path. They then took a leading role in developing the Atomic bomb.

Unfortunately, in 1952, British Intelligence agencies, under pressure from their American counterparts, were operating a rule preventing known-homosexuals being given security clearance. Indeed, many gay men were being unjustly removed from key-positions in Britain (particularly, in the armed forces and civil service), because (mainly due to the illegality of homosexual activity) they were rightly considered to be easy blackmail targets. The previous year, British intelligence had been heavily-embarrassed when two of its agents, Guy Burgess and Kim Philby (both of whom were homosexuals who had been secretly groomed and recruited by KGB agents, when they were university students), had disappeared to the Soviet Union after passing secret intelligence to the Soviets for 20 years.Thus, after his arrest, Dr. Turing had his security clearance immediately revoked and he was excluded from GCHQ. Self-evidently, he must have been placed under M15 surveillance as major security threat  - another possible defector and KGB blackmail targetbut with access to the greater part of the Ultra Secret, and to Cold War, code-breaking techniques.

In 1953, Dr. Turing is known to have been interviewed by British police officers, this time regarding a young Norwegian man who had been visiting with him. He is also known to have taken a holiday in Greece which, due to its proximity to the Soviet Empire, must have really got his MI5 case officers in a flap. However, the extent and nature of the British security services' contact with Dr. Turing in the two years prior to his death, has never been made public.

Although Dr. Turing's friends and family (who initially knew nothing of his historically-important work as a codebreaker) continued to believe that he died accidentally after handling cyanide during a chemistry experiment, other informed-observers have lately-concluded that there is a very strong likelihood he was silenced by MI5, who deliberately applied pressure on him knowing that he would crack and kill himself; for, after WWII, a number of captured Enigma machines were sold by the victorious Allies to developing countries whose leaders and intelligence chiefs had been led to believe that, in its most-advanced form, Enigma was still completely secure. In reality, and unbeknown to the coroner who pronounced a verdict of suicide, at the time of Dr. Turing's death, British, French and American intelligence agencies were all regularly intercepting Enigma-encrypted messages. These top secret communications (some of which must have contained commercially-valuable inside-information) might as well have all been written in plain language due to the computing techniques which Dr. Turing had developed for, and given to, his country.

Edward Snowden

Had Dr. Turing made a run for it and blown the whistle on the vast intelligence-gathering Enigma fraud (a la Edward Snowden), then all Hell might have broken loose.

September 10th 2009, following an Internet-based campaign, British Prime Minister, Gordon Brown, made an official apology for 'the appalling and inhumane way Dr. Turing was treated.' However, Mr. Brown conveniently failed to point out that this 'appalling inhumane treatment,' had been at the hands of a overtly-homophobic, but (in many cases) covertly-homosexual, British establishment, the hypocritical members of which had mostly-failed to recognise, let alone challenge, the rise of the pernicious 'Nazi' ritual belief system, and whom Dr. Turing had secretly played a leading role in saving from destruction.

In May 2012, a private member's Bill was put before the UK House of Lords to grant Dr. Turing a statutory pardon for his criminal conviction of 1952. However, on December 23rd, 2013, it was announced that Dr. Turing had been granted a pardon under the (rarely-used) Royal Prerogative of Mercy.


Following on from work he began in 1941, in 1950, Dr. Turing published a paper, 'Computing Machinery and Intelligence,' in which he discussed the existing philosophical question of whether machines can think. He then proposed a test, in the form of a blind question and answer game, where computers would be used to try to convince humans that they were not engaging with machines, but with other humans. Thus, despite its appearance, the 'Turing Test' is not a high-brow parlour-game or even a scientific experiment to determine whether machines can think, but a rudimentary, logical test of whether an artificial mind can be made to appear to have the same cognitive capacity as the human mind. 


In recent years, various people have suggested ways in which the 'Turing Test' can be reversed, but, as far as I am aware, no one has yet suggested that Dr. Turing's celebrated thoughts on artificial intelligence, can also be applied to the study of the cult/totalitarian phenomenon; for, due to their incapacity to engage with external reality, the inflexible core-adherents of totalistic cults have often been compared to robots. However, the way that exploitative, self-perpetuating non-rational ritual belief systems bait, trap and enslave their prey, by reflecting common human instinctual desires as being obtainable in exchange for absolute subservience, can also be compared to a phenomenon which Dr. Turing did not live to witness - computer viruses. Had Dr. Turing been able to continue his work, he might have eventually felt the need to propose a rudimentary, logical test of whether an artificial mind can be made to appear to have the same ego-related capacity to become delusional as the human mind; for although cult adherents insist that no one is controlling them and that they are excercizing free-willnonetheless, illogically, and without exception, they all see the world in mechanical two-dimensional terms ('negative vs positive', 'us vs them' , 'good vs evil' , 'winners vs losers', etc. ), communicate in code-like thought-stopping language and obey their de facto programmers without question (no matter what suffering this entails).

Given a detailed knowledge of any Utopian fiction modifying the personalities and behaviour of the core-adherents of a particular cultic group, it would, therefore, be a relatively simple matter to program a machine to duplicate the adherents' systematic responses (or indignant refusal to respond), to a series of blind questions concerning the contents of the group's controlling narrativeIn other words, the predictable answers given by deluded core-cult adherents, and those given by machines programmed to duplicate human minds dissociated from external reality, would be indistinguishable. 

David Brear (copyright 2015)

Saturday, 19 December 2015

Pershing Square Capital vs 'Herbalife (HLF)' - Some wider common-sense questions.

December 2012, Bill Ackman overtly challenged 'Herbalife (HLF)' as the effectively-valueless (albeit legally-registered) publicly-traded, corporate front for an illegal pyramid scheme. At the same time, he declared that, after many months of rigorous research and analysis, he had engaged his Hedge Fund, Pershing Square Capital, in a $1.2 billion short-selling trade against 'Herbalife' which would be pursued to its inevitable conclusion, not only to make profits for his shareholders, but also in defence of his fellow citizens.

Three years later, as a direct result of Ackman's intervention (which, to his credit, has created rapidly-heightening public-consciousness in the USA), more than 1000 victims of the 'Herbalife' cultic racket are known to have come forward to file complaints with federal, and state, regulators and law enforcement agencies.

Bearing all the above in mind, the following letter (from 'Pershing Square Capital Management Holdings' to its shareholders, December 2015) was apparently written by Bill Ackman himself.



Our thesis on HLF remains unchanged. We believe that Herbalife will ultimately be subject to regulatory action or will collapse because of fundamental deterioration in its business which relies on the continual recruitment of new victims. During the quarter, the potential for regulatory action increased while business fundamentals deteriorated.

From a regulatory perspective, we view the Complaint that the FTC filed on August 17th against Vemma Nutrition Company (“Vemma”), another MLM whose structure is similar to HLF’s, as a very positive development. The preliminary injunction issued against Vemma on September 18th is likely to make Vemma’s business totally unviable and provides a template for claims the FTC could bring against Herbalife.

On October 27th, New York State Senator Jeff Klein, working with Public Advocate Letitia James and a non-profit community group called Make The Road New York, released a critical report on Herbalife titled: "The American Scheme: Herbalife's Pyramid Shakedown". Based on its hidden camera investigations of more than 60 nutrition clubs located in New York City, the report concluded that Herbalife distributors are “running an illegal pyramid scheme.” The report was supported by data from 56 victims who individually lost as much as $100,000. On December 9th, Sen. Klein held a public roundtable to advance his campaign to stop Herbalife’s deceptive tactics. Senator Klein has proposed New York State legislation that would amend the New York State General Business Law to better protect New York State residents.

Despite predictions from Herbalife supporters that regulatory investigations would end during the quarter, they appear to have intensified. The company has now spent a total of $101 million defending itself, including $11.2 million in the quarter. Expenses related to “responding to governmental inquiries” increased from $5.8 million last quarter to $7.6 million this quarter which reflects the growing intensity of ongoing investigations. Assuming Herbalife is spending about $500 per hour on lawyers, $ 7.6 million represents 15,200 hours of legal time during the quarter, or 168 hours of legal time per day, seven days per week.

Herbalife’s fundamentals continued to decline during the quarter. Notably “total members” – perhaps Herbalife’s most important operating metric – declined from 4.1 million in the second quarter to 4.0 million in third quarter indicating that Herbalife churned through at least 500,000 members as the rate of member churn exceeded Herbalife’s ability to find new victims.3 On its conference call, the company also began using a new operating metric called ‘active members,’ suggesting that Herbalife concedes that a proportion – we expect, a large proportion – of its members are inactive. In our experience, companies that change the standards by which they measure themselves do so only when the old metric shows business deterioration that they would rather not disclose.

With respect to third quarter earnings, Herbalife posted weak revenues, but was able to reduce or defer certain expenses in order to generate earnings that exceeded analyst estimates. Among other questionable add-backs, Herbalife excludes regulatory and costs to “defend its business model” from its earnings estimates despite the fact that these expenses are likely to continue. On a consolidated basis, the company reported net sales of $1.1 billion, down 12% year-over-year, which was worse than Street expectations and below management guidance. The negative variance was largely attributable to foreign exchange headwinds. Similar to last quarter, China continues to be the key driver of Herbalife’s growth. While China’s year-over-year growth was 25%, Herbalife China revenues declined 5% when compared to the previous quarter.

Notably, HLF’s South Korean market continued to show substantial deterioration in the quarter. South Korea has been one of Herbalife’s largest markets and a significant driver of the company’s revenue and earnings growth. Over the last several years, South Korea has been Herbalife’s third or fourth largest market and one of its most profitable with approximately 56% contribution margins versus 43% for the rest of the company. Beginning a year ago, Herbalife Korea began to decline. This deterioration accelerated notably this quarter, down 39% versus last year on a constant-currency basis, and down 46% on an actual basis.

While management continues to blame the decline in Korea on “changes in the business model,” to us this looks like the classic “pop-and-drop” that is pervasive in pyramid schemes, a phrase that CEO Michael Johnson previously used to describe Herbalife’s rapid growth and inevitable decline in certain geographical regions. If one is looking for obvious evidence that Herbalife is a pyramid scheme, one need only look at the massive growth and rapid decline of Herbalife’s South Korea business and compare it with Unilever or another legitimate consumer packaged goods company.


Yet, this recent Pershing document begs some wider common-sense questions:

  • Why on Earth do Bill Ackman and his associates continue to employ (albeit occasionally) the thought-stopping jargon terms ('MLM', 'business,' etc.) to describe the demonstrably-criminal, blame the victim, cultic enterprises known as 'Herbalife', Vemma' etc. ?

  • Why on Earth haven't Bill Ackman and his associates acted responsibly, come out and openly stated that 'Herbalife' is neither original nor unique, and clearly warned the public that 'Herbalife' is just one part of an ongoing criminogenic phenomenon of historic significance?

  • In the past three years, why on Earth have the bosses of the 'Herbalife' cultic racket been allowed to  spend $101 millions stolen dollars obstructing justice in order to continue to commit related frauds?

  • Since its instigation in 1989, exactly how many individuals in total have been churned through the so-called 'Herbalife MLM income opportunity?'

  • What percentage of all these constantly-churning individuals have remained contractees of the so-called 'Herbalife MLM income opportunity' for more than one year, two years, three years, four years, five years, etc.?

  • Exactly how many of all these transient contractees of the so-called 'Herbalife MLM income opportunity' have paid income tax on net-profits accruing from their temporary so-called 'MLM businesses?'

  • Since the coining of the thought-stopping jargon term, 'Multi-Level Marketing,' by the instigators of  the 'Nutrilite'/ 'Mytinger and Casselberry' racket in the 1940s, exactly how many individuals in total have been churned through copy-cat so-called 'MLM income opportunities?'

  • What percentage of all these constantly-churning individuals have remained contractees of any copy-cat so-called ' MLM income opportunity' for more than one year, two years, three years, four years, five years, etc.?'

  • Exactly how many transient contractees of copy-cat so called 'MLM income opportunities' have paid income-tax on net-profits accruing from their temporary so-called 'MLM businesses?'

  • Given that the withholding of key-information from people in order to take their money is fraud, what possible lawful reason could there be for the key-information contained in the answers to above six questions to have been withheld from the public and from regulators?

  • Do the bosses of the 'Herbalife' cultic racket have any litigation/ legal expenses insurance for themselves or for their demonstrably-counterfeit 'direct selling' company?

  • If the bosses of the 'Herbalife' cultic racket don't have any litigation/ legal expenses insurance for themselves and their demonstrably-counterfeit 'direct selling' company, why have they been unable to obtain it?

  • Do the bosses of any 'MLM income opportunity' cultic racket have any litigation/ legal expenses insurance for themselves or for their demonstrably-counterfeit 'direct selling' companies?

  • If the bosses of 'MLM income opportunity' cultic rackets don't have any litigation/ legal expenses insurance for themselves and their demonstrably-counterfeit 'direct selling' companies,  why have they been unable to obtain it?

  • Other than its instigators, in whose financial interests has it been for the pernicious, thought-stopping, totalitarian/ totalistic Utopian fairy story entitled, 'Multi Level Marketing Income Opportunity,' to have been allowed to continue to be peddled to countless millions of vulnerable people, without any rigorous official challenge to its authenticity?

David Brear (copyright 2015)

Wednesday, 9 December 2015

'Herbalife (HLF),' Bill Ackman, Aaron Smith-Levin and 'Scientology.'

Yesterday, the name Aaron Smith-Levin re-appeared in the media linked to 'Herbalife,' Bill Ackman and Pershing Square Capital, but this time there was no mention of 'Scientology.'


'In a FOX Business Network Exclusive, Charlie Gasparino has learned Herbalife's (HLF) legal team is upping the pressure against hedge fund activist Bill Ackman.

The company's legal counsel sent a letter to Ackman's Pershing Square Capital Investment's outside research firm, OTG Research Group, demanding that they stop soliciting confidential, proprietary and privileged information from both current and former Herbalife employees. The letter cites Ackman and his campaign against Herbalife describing his research tactics as troubling and improper. 

OTG Research Group is run by Aaron Smith-Levin who is noted among the investment community for his ability to conduct deep corporate research. 

Ackman and Smith-Levin declined to comment.'

Aaron Smith-Levin
Aaron Smith-Levin

Two years ago, it was reported that Bill Ackman had employed a 'Scientologist,' Aaron Smith-Levin, to investigate 'Herbalife.'


At first, I wondered if this Forbes article could possibly be an April Fool's joke, but, sadly, it was for real.

Aaron Smith-Levin was, in fact, brought into 'Scientology' by his mother in 1986, when he was a mere 5 years old, but now he is no longer under the influence of the organization.


Judging by his recent statements, Aaron Smith-Levin apparently now realises that (what he refers to as) 'fundamentalist' or 'hard-core Scientology' is an absurd, but nonetheless dangerous, mind-bending, criminal racket of which he was an unwitting participant and collateral victim. He even compares the paranoid model of reality of core-'Scientologists' to that of Islamist terrorists. However, in 2014, I sent some common-sense questions to Bill Ackman, but I never got a reply:

  • How exactly did you come into contact with Aaron Smith-Levin?
  • Have you given any confidential information to Mr. Smith-Levin or his 'OTG' associates?
  • Do you still have contact with Mr. Smith-Levin or his 'OTG' associates?
  • Do you have any understanding of the comic-book story of 'Good vs Evil' which controls the minds and behaviour of core-'Scientology' adherents, and which has been used as the false-justification for a catalogue of crimes?
  • At the time you employed 'OTG Research Group,' were you aware of: 'Scientology's' previous links to 'Herbalife' in Europe? 'Scientology's' history of using agents to infiltrate and destroy its perceived 'evil enemies?' 'Scientology's' involvement in the vast Ponzi scheme fronted by Reed Elliot Slatkin?

Right now, I'm not absolutely sure what to make of former 'Scientology Sea Org' member, Aaron Smith-Levin. It would probably take days thoroughly to study all the confusing evidence which has recently appeared on the Net - revealing his current state of mind and his insider knowledge of the clandestine criminal objectives of the 'Scientology' leadership. 

What I don't understand is how Aaron Smith-Levin can have failed to spot the glaringly-obvious similarities between the 'Herbalife' and 'Scientology' rackets. Perhaps he has spotted them, but failed to speak out?

There are now a growing number of persons, like Mike Rinder, who have claimed to have participated in criminal activities, and to have lied for years, before coming out of the 'Scientology' organization (because it has become corrupt under the wicked leadership of David Miscavige), but who have illogically continued to insist that they remain faithful adherents of L. Ron Hubbard's 'Scientology religion.'

I have described these confused, and confusing, former 'Scientology' pawns as being the equivalent of the early Protestants who refused the authority of the corrupt heads of their Roman Catholic Church, but who kept their faith in 'Jesus' and and who brought about the 'Reformation.'

That said, I would contend that 'Scientology' is self-evidently a criminogenic organization, which, by its very nature, cannot be reformed.


The following extract comes from 'Les Sectes en Belgique et au Luxembourg' ('Cults in Belgium and Luxembourg') a book (published in 1994) written by Alain Lallemand, a journalist on the popular, Franco-Belgian Newspaper, 'Le Soir.'

'What is the connection between Herbalife and Scientology? According to Jean Albert Fisch of the Circle for the Defence of the Individual and the Family (CDIF), it was a German Scientologist, the main donor on the list of the International Association of Scientologists (IAS), who launched the sale of Herbalife in Germany. A few adherents of the Church of Scientology control a share of the (Herbalife) sales networks in France, wrote Le Monde in July 1993. The question even appeared in the Luxembourg Parliament in April 1993, when a member, John Schummer, asked the Minister for Health about collusion between recruiters from Herbalife and Scientology; in the meantime the German television station Sat 1, had been a lot more explicit: an ex-Scientologist had explained how he had been advised to use Herbalife products during Hubbard/Dianetics training courses. Otherwise, almost all other Scientologists are taking them, he declared.' 


David Brear (copyright 2015)



The 'Scientology' mob's Ponzi scheme (apparently) instigated by Reed Slatkin.

I was recently asked if I could re-post my analysis of Reed Slatkin's 'Long Con.' 

Reed Slatkin is an example of a deeply-deluded individual who was both victim and perpetrator of a 'Long Con.'

A 'Long Con' is a form of fraud maliciously designed to exploit victims' existing beliefs and instinctual desires and make them falsely-believe that they are exercising a completely free-choice.

'Long Cons' comprise an enticing structured scenario of control that is acted out as reality over an extended period. Like theatrical plays, 'Long Cons' are written, directed and produced. They involve leading players and supporting players as well as props, sets, extras, costumes, script, etc. The hidden objective of 'Long Cons' is to convince unwary persons that fiction is fact and fact is fiction, progressively cutting them off from external reality. In this way, victims begin unconsciously to play along with the controlling-scenario and (in the false-expectation of future reward) large sums of money or valuables can be stolen from them. Classically, the victims of 'Long Cons' can become deluded to such an extent that they will empty their bank accounts, and/or borrow from: friends, family members, etc.

Reed Elliot Slatkin (2003)

When I first started my Blog, I was contacted by a former adherent of ‘Scientology’ who told me that, several years previously, he had fallen victim to a 'Long Con' ostensibly run out of Santa Barbara California by Reed Elliot Slatkin (1949-2015), a ‘Minister of the Church of Scientology.’  

I was directed to www.slatkinfraud.com/index.php

Reed Slatkin (circa 1995)
Reed Slatkin (circa 1980)

Somewhere around 1985-1986, Reed Slatkin (then aged 36, and whose involvement with ‘Scientology’ already stretched back 24 years) began illegally to acquire control over a capital sum which he eventually would pretend totalled almost $600 millionsThis was achieved by him posing as an ordinary man turned infallible capitalist superman – a wise ‘Investment Club Manager’ who (guided by the ‘ethics and spiritual technology' of his ‘religion’) always returned substantial annual profits (around 25%) for his ‘Club Members,’ no matter what the overall trading conditions were. 

Many of Slatkin’s victims were wealthy, low-level ‘Scientology’ initiates programmed to defer unconditionally to the imaginary moral and intellectual authority of high-level initiates; others were well-heeled Hollywood types.

Unfortunately, exactly like Bernie Madoff, Slatkin was nothing more than an economic alchemist - a once-penniless nobody: turned self-proclaimed financial guru who, despite the huge amount of cash he handled for (ultimately) 800+ listed ‘investors,’ was not even registered with the US Securities and Exchange Commission. Unlike Madoff, at first Slatkin completed trades, but these were generally disastrous and his losses quickly grew to monumental proportions. For while, Slatkin did not display the trappings of wealth. Many of the failing ‘partner’ companies which he recklessly continued to pour his victims’ money into, were created and run by his fellow core-‘Scientologists’ (some of whom had previous convictions for fraud www.slatkinfraud.com/companies_2.shtml ).  

This tragicomic aspect of the Slatkin saga immediately put me in mind of Mel Brooks’ 1968 comedy film, ‘The Producers,’ in which the two central characters, ‘Max Bialystok’ and ‘Leo Bloom,’ run a 'Long Con' by staging a financially-suicidal 'Nazi'-themed Broadway musical (‘Springtime for Hitler’) in order to cheat their elderly (mostly Jewish widow) ‘investors.’

Image result for reed slatkin

During 15 years, Slatkin and his family were extensively promoted by 'Scientology' propaganda as a glowing example of the limitless prosperity, freedom, health and happiness which unquestioning adherence to the 'Church' brings. 

Meanwhile, Slatkin succeeded in maintaining an absolute monopoly of information about his criminal enterprise - issuing countless fake ‘account statements’ and actually paying out what he arbitrarily defined as profits’ to privileged investors’ by using authentic cash taken from fresh victims. In total, Slatkin paid  $279 millions to a group of persons who (on paper) had originally given him a total of only $128 millions to invest. In this way, between January 1st 1986 and April 30th 2001, Slatkin passed more than $151 millions of stolen funds to 75 (apparently independent) persons many of whom were core-‘Scientologists.’ A second (slightly larger) group pocketed $44 millions. If we just take one example, Joel Kreiner, ‘Scientology’s’ primary tax attorney, received a whopping $5 866 583. 

Well into this period, by chance, Slatkin became involved in the launch of a truly successful company, the Internet service provider, 'EarthLink Inc.' Sadly, this fluke only served to enhance his unwarranted reputation as a shrewd businessman on the cutting edge of technology. Thus, drawing more victims into his pay-to-play game of make-believe. Even though Slatkin's initial $75 000 investment in 'Earthlink' soon leapt to more the $100 millions (when the company went public), this did not cover, and wasn't connected to, his other trading losses. Evidently, 1986-2001, no agent of law enforcement ever asked Slatkin the one blindingly-obvious question which would have immediately revealed what he was doing:

'Excluding your own documentation, what quantifiable evidence can you produce to prove that your alleged investment fund has had any significant or sustainable source of revenue other than its own alleged investors?'

By the spring of 2001, the flow of fresh cash seemed to be finally drying up. A few victims had begun to smell a rat when Slatkin (who couldn't pay them their fictitious ‘profits,’ let alone refund their so-called 'investments') began behaving strangely and stalling for time. He was now escorted by an echelon of aggressive bodyguards. One of Slatkin's victims who had handed over $15 millions, lost patience and filed suit. As a result, part of Slatkin's assets were frozen. By this stage,no one believed his lies and (bombarded with more lawsuits and demands for payment), he filed for bankruptcy.


It turned out that the SEC had been investigating Slatkin off and on since 1997 (because he wasn't registered with SEC), but officials had swallowed his comic-book lies, and documents, and failed to take any decisive action. They'd been led to believe that Slatkin was in the process of closing his business.

It wasn't until later in 2001, that the SEC finally strolled in - filing a civil enforcement action, freezing Slatkin’s remaining assets. Simultaneously, the FBI and IRS executed criminal search warrants and immediately discovered that Slatkin’s miraculous, ever-growing ‘investment fund’ was indeed a classic Ponzi scheme, without any significant or sustainable source of external revenue other than its victims. By this late stage, the bogus business was in deficit to the tune of $255 millions. Furthermore, the FBI found that Slatkin had gone to the most extraordinary lengths - including the creation of a fictitious Swiss bank, NAA Financial,’ - to conceal the truth, obstruct, and/or divert, the limp SEC investigation and continue to commit fraud. 


In October 2001, a major article appeared in 'Esquire Magazine.' This revealed that when Slatkin had previously been interviewed by SEC lawyers, much to their amazement, in response to a standard question about his educational/professional qualifications (or rather lack of qualifications), he calmy explained that he was a 'Certified Dianetics Auditor' and he treated them to a deeply-mystifying, extended-lecture on his ‘Scientology Beliefs and Ethics,’ recounting his 38 years in ‘Scientology.’ 

This remarkable testimony included how Slatkin:

- (as a 14 year old boy in 1963) was recruited into the organisation by his uncle, after the sudden death (by suicide) of his father.

L. Ron Hubbard playing the Lord of Saint Hill Manor

- (before graduating from High-School) travelled to the UK to study ‘Spiritual Technology’ at Saint Hill Manor under L. Ron Hubbard himself.

- (in his late teens) was involved in the setting up of Hubbard’s ‘Sea Organization’  in Scotland, but was deported from the UK, and his passport confiscated, when the UK Minister for Health declared ‘Scientology’ to be a public danger.

During his SEC deposition, Slatkin (without the slightest embarrassment) proudly recited from the comic-book ‘Scientology’ fiction as though it was fact; demonstrating that he was still the deluded de facto agent of its authors. However, during his trial (more than 2 years later) his lawyer stated that it had taken a while to ‘deprogram’ his client, but now Slatkin accepted that he’d  been acting under the influence of ‘Scientology.’ 


April 2002, confronted with reality, Slatkin had given himself up to the authorities.

On September 2nd 2003, after pleading guilty to mail fraud, wire fraud, money laundering and obstructing justice, Slatkin was sentenced (by California Judge, Magaret Morrow), to serve 14 years in a federal prison. Although ‘Scientology’s’ attorneys subsequently maintained that Slatkin’s explanation of his behaviour was rejected out of hand by Judge Morrow, she actually felt obliged to state before sentencing that:

‘The Court does not discount the importance of the Church (‘Scientology’) in his (Slatkin's) life and that it colored his judgement.’

During the trial, and sentencing, a claque of  Scientologists’ in civilian dress had queued to be first into the courtroom. They all smirked and sneered and giggled in unison, acting as though Slatkin’s attorney was a crazy conspiracy theorist, each time he had made the slightest reference to his client being programmed. A highly-convenient witness (and long-time ‘Scientologist’) Daniel W. Jacobs (b. 1946), testified (under oath) that Slatkin had met with him in a restaurant in 2001 and openly boasted about  having:-

- millions of dollars stashed away in gold, art works, etc.
- a plan to ‘implicate Scientology.’

Jacobs (who described himself as a ‘financial consultant’) had, in fact, made a prior agreement with the prosecution. In return for his co-operation and guilty plea, he would receive a derisory 4 month prison sentence for conspiracy to obstruct the SEC investigation. Jacobs admitted that, for 12 months, he had posed as a representative of Slatkin’s fictitious Swiss Brokerage.’ He had assisted in the production of fake ‘Swiss account statements’ and the running of fake ‘Swiss telephone numbers,’ all of which were designed to fool victims and regulators into believing that a reputable overseas financial institution held hundreds of millions of dollars of missing cash. Tellingly, Slatkin’s alleged stash has never been traced, and (in direct contradiction to Jacob’s statement) the quantifiable evidence proved that Slatkin had paid $1.7 million of his ill-gotten gains directly to Scientology’ front-groups, and that he had facilitated the channelling (via favoured ‘investors’ who were ‘Scientologists’) of an unspecified amount of stolen money to corporate structures affiliated to ‘Scientology.’ Indeed, in November 2008, it was reported that a ‘Scientology’ attorney, David Schindler, had ‘negotiated a compromise’ with Alexander Pilmer, an attorney acting for Slatkin’s bankruptcy trustee, R. Nodd Nielson, in which ‘Scientology’ agreed to pay back $3.5 millions to victims. After being in receipt of bundles of cash for 15 years (apparently in total ignorance that it was stolen), the leadership of ‘Scientology’ suddenly pronounced the ‘Excommunication’ of Slatkin, and all the many references to him as a glowing example of a ‘Scientology’ success story, were removed from the organization’s propaganda. 

To date, no further investigation has been pursued against the leadership of ‘Scientlogy’ by the US authorities regarding this affair. The buck stopped with Slatkin and five associates, even if the bucks didn’t. 

60% of what Slatkin stole, has never been returned to his victims.


I’d like to thank Robert Fitzpatrick (President of Pyramid Scheme Alert) for drawing my attention to the fact that Ms. Joan 'Jodie' Bernstein (Director of Consumer Protection at the Federal Trade Commission, 1997-2002) was solicited by the St. Louis-based law firm, Bryan Cave LLP, and that (in her new, much more highly-paid capacity) she then enthusiastically lied to her former colleagues at the FTC on behalf of the bosses of ‘Amway’ cultic racket - arguing that there was no need for government regulation of her client in particular, and of ‘Multi-Level Marketing’ in general.

It will probably come as no surprise to readers to learn that Bryan Cave LLP has also defended Reed Slatkin. Indeed, the late Mr. Gerald Boltz (a former Securities Exchange Commission Administrator) was also solicited by Bryan Cave LLP, and (in his new, much more highly-paid capacity) he then enthusiastically lied to his former colleagues at the SEC on behalf of Reed Slatkin, arguing (at the beginning of 2000) that there was no need to file a civil enforcement action to  freeze his client’s remaining assets. http://www.slatkinfraud.com/depo_jan.htm

In 2003, it was reported that Reed Slatkin’s bankruptcy trustee, R. Todd Neilson (a former FBI agent) had complained to US Bankruptcy Judge, Robert Riblet, that Gerald Boltz and his associates at Bryan Cave LLP had deliberately mishandled Slatkin’s case and, thus, permitted hundreds of individuals to continue to lose their money. Neilson argued that Boltz (as a former top SEC lawyer) should have immediately deduced that Slatkin was running a Ponzi scheme, but (inexplicably) he did not.

Bryan Cave LLP subsequently filed a ‘tentative settlement’ with the US Bankruptcy Court, in which the law firm denied any wrongdoing, but (all the same) offered to pay Slatkin’s trust $650 thousands to be distributed to its creditors. Limply, Bryan Cave LLP (a firm that promotes itself as being expert in financial fraud) posed as a wide-eyed victim totally deceived by Slatkin’s fake documentation. In any event, Gerald Boltz’ amoral defence was that, as Slatkin’s counsel, his duty was to his client: not to his client’s ‘investors.’

Bennetta Slaughter

For a while, in another obvious attempt to obstruct justice, a 'Scientology' agent called Bennetta Slaughter, tried to create a fake association to 'represent Slatkin's investors' http://www.slatkinfraud.com/slaughter.php. Immediately after his trial, Slatkin’s mystifying labyrinth of lies was so vast that it was still in process of being partially dismantled by Alexander Pilmer, the attorney acting for R. Todd Neilson. At this time, hundreds of Slatkin’s (ultimate) victims were owed around $240 millions, and more than 200 lawsuits had been filed to recover money from corporate structures and individuals who had profited directly from Slatkin’s crimes. However, Pilmer was also in negotiation with attorneys acting for another (even more-mystifying) labyrinth of lies. The leadership of ‘Scientology’ had profited indirectly from Slatkin’s crimes - receiving an unspecified number of payments (arbitrarily defined as ‘donations’) via an unspecified number of corporate structures (arbitrarily defined as ‘non-profit-making organisations’) and from around 75 individuals who headed the list of 'Scientologists' who had profited directly. For obvious reasons, Pilmer requested that all these ‘donations’ to ‘Scientology Groups’(allegedly totalling many tens of millions of dollars) should be immediately declared and returned. After 5 years of wrangling‘Scientology’ coughed up a mere $3.5 millions, but this included $1.7 millions that Slatkin ‘donated’ himself.

To this day, it is not known exactly how much of the unlawful profits from the Slatkin 'Long Con' ended up with the leadership of 'Scientology.'

However, many obvious questions have (apparently) never been asked by law enforcement agents - principally:

Since, out of the group of core-‘Scientologists’ who (over a period of 15 years) were proved to have received a total of $151 millions stolen by Slatkin (arbitrarily defined as ‘profits on investments’ ), a significant number were from the so-called ‘Sea Organisation’ who are paid just $50 per week, where exactly did certain pious members of this poor ‘Scientology Religious Order’ suddenly acquire the odd quarter of a millions dollars (in cash) to ‘invest’ with Slatkin in the first place?

Reed Slatkin
Reed Slatkin 2013


It has been variously reported on Sites which monitor 'Scientology,' that Reed Slatkin died of a heart attack in either 2013 or 2015 and that this has been confirmed by his ex-wife and verified with official records. For some mysterious reason, it seems that the death of one of history's largest Ponzi schemers has never been reported by the mainstream media.


According to Wikipedia, Slatkin died June 23rd, 2015 aged 66.

Again, Wikipedia gives no reference to any mainstream media report of Slatkin's death.

David Brear (cpyright 2018)