Federal grand jury indictment alleges that SAC maintained elite group that has traded on insider information since 1999
A federal grand jury has indicted SAC Capital, the embattled hedge fund that has been pursued by financial authorities for years, for insider trading after regulators failed to charge its powerful founder, Steven A Cohen.
The US attorney who brought the charges, Preet Bharara, also hit the firm with civil money-laundering charges that would require the firm to forfeit potentially billions of dollars in assets.
A 41-page indictment alleges that SAC, founded in 1992, maintained an elite group that has traded on insider information since 1999.
SAC is also alleged to have hired portfolio managers specifically for their insider contact in the industries in which they traded, and failed to raise red flags when insider information was suggested as the basis for a trade.
The indictment marks the culmination of a six-year investigation by Bharara. The government pursued an investigation against Cohen but apparently dropped its attempt to bring charges last month.
“SAC became, over time, a veritable magnet for market cheaters,” Bharara said at a news conference in Manhattan. “That’s why the institution, and not individuals, stand accused of insider trading.” He said that the charges were “a predictable product of pervasive institutional failure”, and added: “A company reaps what it sows. SAC seeded itself with corrupt traders.”
Cohen was not mentioned by name in the indictment but referred to obliquely as “the SAC owner” and an “individual residing in Greenwich, Connecticut.”
“The SAC owner failed to question candidates who implied that their ‘edge’ was based on sources of inside information,” the indictment says. Later, it notes: “The SAC owner fostered a culture that focused on not discussing inside information too openly, rather than not seeking or trading on such information in the first place.”
The government’s case centers on SAC’s culture. It alleges that employees at SAC “engaged in a pattern of obtaining inside information from dozens of publicly-traded companies across multiple industry sectors. Employees …traded on inside information themselves and, at times, recommended trades to the SAC owner based on inside information.”
Under US securities laws, fund managers may only trade on company information that has been publicly disclosed.
The indictment mentions several other SAC employees as well as employees of affiliate investment firms. One portfolio manager for Cohen-controlled Sigma Capital, Wes Wang, is cited in connection with insider trading in eight technology stocks including Taiwan Semiconductor, Cisco, and eBay. In 2012, Wang pleaded guilty to two counts of conspiracy to commit securities fraud.
Other alleged insider trading by SAC Capital mentioned in the indictment includes some of the biggest North American companies, such as Intel, Advanced Micro Devices, BlackBerry maker RIM, and Yahoo.
SAC denied the allegations. It said in a statement: “SAC has never encouraged, promoted or tolerated insider trading and takes its compliance and management obligations seriously. The handful of men who admit they broke the law does not reflect the honesty, integrity and character of the thousands of men and women who have worked at SAC over the past 21 years. SAC will continue to operate as we work through these matters.”
The chief target of the US attorney’s legal strategy, according to experts, is to foil Cohen himself by attacking his deputies and the trading culture of the firm he created. Cohen controls 60% of the money in SAC Capital and has a net worth of roughly $9bn, according to Bloomberg.
The indictment holds that SAC’s trading culture was heavily centralized, with dozens of portfolio managers answering directly to Cohen without knowledge of what their peers in the firm were doing.
Cohen, until his legal troubles, was a towering figure on Wall Street, a billionaire unknown to much of the public but famous in the finance community for his enviable investment profits and casual style. While maintaining an intense work regimen – working at over seven computer screens in his office – he was habitually seen around the firm’s Connecticut trading floor in a blue fleece vest that became almost iconic.
He was known for quirks such as his disdain of ringing phones, which created a silent trading floor, and maintaining the firm’s temperature at a breezy 69F so traders would not be too comfortable.
For investors, he held a notable mystique: SAC was so sought-after by clients that they paid the firm a fee of 3% of the money under management and allowed the firm to take up to 50% of their investment profits, according to the indictment.
SAC seemed to have a green thumb for stocks, watching them gain up to 10% in value in a single day after buying shares, and up to 15% in a month, according to a Wall Street Journal analysis in March.
The swirl of legal issues around insider trading have already temporarily claimed the careers of two of Cohen’s top lieutenants, Michael Steinberg and Mathew Martoma, both of whom were arrested at their homes and subsequently indicted. The government’s case against Martoma accuses him of making a profit of $276m by trading on nonpublic information related to healthcare companies Wyeth and Elan.
Martoma has maintained his innocence. His trial is set for November.
The indictment is the latest in a series of investigations of SAC by regulators such as the Securities and Exchange Commission as well as federal prosecutors.
Most recently, last week the SEC filed civil administrative charges against Cohen, arguing that he “failed reasonably to supervise” Steinberg and Martoma.
In response to the SEC’s charges, Cohen’s lawyers argued, in 46-page white paper to staff, that he was too busy to read his email, and estimated he opened only 11% of his messages. As a result, they held, he could not have acted on insider tips contained in those emails.
Previously, SAC and its affiliates paid a $617.5m fine to settle SEC charges on insider trading, even though a judge grew irritated that the firm would be able to pay money to absolve itself of charges without admitting or denying wrongdoing.
Democrat congressman Alan Grayson says hearing will help to stop ‘constant misleading information’ from intelligence chiefs
Congress will hear testimony from critics of the National Security Agency’s surveillance practices for the first time since the whistleblower Edward Snowden’s explosive leaks were made public.
Democrat congressman Alan Grayson, who is leading a bipartisan group of congressman organising the hearing, told the Guardian it would serve to counter the “constant misleading information” from the intelligence community.
The hearing, which will take place on Wednesday, comes amid evidence of a growing congressional rebellion NSA data collection methods.
On Wednesday, a vote in the House of Representatives that would have tried to curb the NSA’s practice of mass collection of phone records of millions of Americans was narrowly defeated.
However, it exposed broader-than-expected concern among members of Congress over US surveillance tactics. A majority of Democrat members voted in support of the amendment.
Grayson, who was instrumental in fostering support among Democrats for the the amendment, said Wednesday’s hearing would mark the first time critics of NSA surveillance methods have testified before Congress since Snowden’s leaks were published by the Guardian and Washington Post.
“I have been concerned about the fact that we have heard incessantly in recent weeks from General Keith Alexander [director of the NSA] and Mr James Clapper [director of National Intelligence] about their side of the story,” he said. “We have barely heard anything in Congress from critics of the program.
“We have put together an ad hoc, bipartisan hearing on domestic surveillance in on the Capitol. We plan to have critics of the program come in and give their view – from the left and the right.”
Grayson said the hearing had bipartisan support, and was backed by the Republican congressman Justin Amash, whose draft the amendment that was narrowly defeated.
“Mr Amash has declared an interest in the hearing. There are several others who have a libertarian bent – largely the same people who represented the minority of Republicans who decided to vote in favour of the Amash amendment.”
The hearing will take place at the same time as a Senate hearing into the NSA’s activities. That will feature Gen Alexander and possibly his deputy, Chris Inglis, as well as senior officials from the Department of Justice and FBI.
The simultaneous timing of the hearings will lead to a notable juxtaposition between opponents and defenders of the government’s surveillance activities.
“Both Congress and the American people deserve to hear both sides of the story,” Grayson said. “There has been constant misleading information – and worse than that, the occasional outright lie – from the so-called intelligence community in their extreme, almost hysterical efforts, to defend these programmes.”
Although not a formal committee hearing, Grayson’s event will take place on Capitol Hill, and composed of a panel of around a dozen members of Congress from both parties.
Grayson said those testifying would include the American Civil Liberties Union as well as representatives from the right-leaning Cato Institute.
“They are both going to come in and make it clear that this programme is not authorised by existing law – and if it were authorised by existing law, that law would be unconstitutional,” Grayson said.
The congressman added that Glenn Greenwald, the Guardian journalist who first revealed details of the surveillance programmes leaked by Snowden, had also been invited to testify via video-link from his base in Rio.
“Even today, most people in America are unaware of the fact the government is receiving a record of every call that they make, even to the local pizzeria,” Grayson said.
“I think that most people simply don’t understand that, despite the news coverage, which my view has been extremely unfocused. There has been far too much discussion of the leaker, and not enough discussion of the leak.”
Train driver Francisco Jos Garz n, 52, arrested
Black box data crucial in finding out why train was speeding
Seventy-eight killed in crash near Santiago de Compostela
The black boxes from the high-speed train that hurtled off the tracks in north-west Spain have been recovered from the wreckage and handed to investigators, officials say.
The recorders, which register speed, distances and other data, are crucial to resolving the mystery of why the Alvia 151 shot into a tight bend in the approach to Santiago de Compostela at more than twice the approved speed.
Police in Santiago de Compostela said the driver of the train, 52-year-old Francisco Jos Garz n, had been under arrest since Thursday evening.
El Pa s reported that Garz n had received an order to reduce speed just seconds before the crash, and acknowledged it by pressing a button in the drivers’ cab. It remained unclear whether he had been unable or unwilling to brake the train, which was running five minutes behind schedule.
A spokeswoman for the courts in Santiago del Compostela, Mar a Pardo R os, confirmed on Friday that the train’s “black boxes” had been found, but did not indicate how long the analysis would take.
Police revised the death toll on Thursday to 78, but said the count could change as body parts were identified. Antonio del Amo, head of the Spanish national police’s central forensic unit, said 78 bodies had been recovered, together with numerous body parts. He said that six of the corpses had yet to be identified.
The city’s police chief, Jaime Iglesias, said Garz n would not be interrogated on Friday.
Garz n was led from the scene of the tragedy with his face covered in blood. He was given nine stitches to a head wound, but was otherwise apparently unharmed.
The driver spent the night in hospital with his mother at his bedside and under police guard. Contacted by telephone by the regional newspaper, La Voz de Galicia, Garz n refused to comment beyond saying “You [can] imagine how I am.”
In a recorded call to the emergency services shortly after the disaster, Garz n reportedly said: “I should have been going at 80 [km/h] and I am [sic] going at 190.” He reportedly added: “Let’s hope there aren’t any dead.”
Garz n reportedly tested negative for alcohol following the crash.
Colleagues described Garz n as an experienced railwayman who had worked for Spain’s national rail company, Renfe, for around 30 years. He had been a driver since 2003. The company’s president, Julio G mez-Pomar Rodr guez, said Garz n, from Monforte de Lemos, also in Spain’s north-west, had worked on the Ourense to Santiago stretch of the high-speed network where the accident took place for more than a year.
Garz n’s position was compromised by the emergence of a photograph that he posted to his Facebook page showing his speedometer at 200km/h. It was not clear if, when the photograph was taken, he was on a stretch of the network where high speeds were permitted.
It nevertheless surprised Garz n’s friends. One wrote: “You’re going like the bloody clappers, lad. Brake.” The driver replied: “I’m at the limit. I can’t go faster, otherwise they’ll fine me.”
The daily El Mundo, which first published the photograph and the exchange of messages on its website, said that they had been removed from Garz n’s Facebook page.
The accident took place just after the point at which one safety system gives way to another. For the first 80km after Ourense, the line is ostensibly governed by the EU-sponsored European Rail Traffic Management System (ERTMS), which would have braked the train automatically. However, on the approach to Santiago de Compostela station the track is subject to Spain’s ASFA system. This will stop a train altogether, but only if it is travelling at more than 200km an hour.
At lower speeds, warning signals are emitted. But it is left to the driver to implement them.
The train derailed just a few hundred metres beyond the cut-off point for the ERTMS, raising the question of why the system did not intervene to brake the train earlier.
El Pa s quoted a government source as saying that, even on the stretch of the line on which the ERTMS had been installed since November 2011, it was not used. No reason was given.
According to Renfe, there were 218 passengers and five railway staff on the train involved. It is Spain’s worst rail accident for more than 40 years. By late on Friday morning, 83 people were still in hospital, with 32 of them on the critical list.
Majority of Malians who fled war in the north fail to receive voters’ cards, leaving them without a voice in Sunday’s polls
The vast majority of the half a million people who have fled the war in northern Mali will be excluded from voting in Sunday’s presidential election.
The polls are being held to replace a transitional regime so that up to $4bn ( 2.6bn) in international aid can be released to an accountable and representative government.
Large portions of the northern population will, however, have no voice in the process, even though they bore the brunt when separatist and Islamist rebels swept across Mali, and France intervened militarily this year.
According to the UN refugee agency, UNHCR, fewer than 300 voters’ cards have been distributed among the 173,000 Malians living in camps in neighbouring Niger, Burkina Faso, Mauritania and Algeria. Least well-served, according to the agency, are 50,000 refugees in Burkina Faso, where only 38 voters’ cards have arrived.
“The number of voters’ cards delivered is meaningless, given that 20,000 refugees claimed to have registered and 11,000 of them were identified in the electoral database,” UNHCR’s acting head in Mali, S bastien Apatita, said. “A great number of the estimated 353,000 Malians who are displaced within the country are facing the same problem because their voters’ cards have been delivered to the localities where they registered in 2009 or 2010.”
Apatita said he had put the UNHCR’s concerns to Colonel Moussa Coulibaly Sinko, the minister for territorial administration, who is organising the election. “We know that both refugees and internally displaced people are eager to take part. I went to the minister looking to discuss some solutions. But the issue is highly sensitive and the minister quoted the electoral law, which says no one can vote without a voter’s card. The minister said he would release more teams into the field to try to locate missing cards. But in the time left, all we can hope for is a miracle,” he said.
The ministry spokesman, Gamer Dicko, said 82% of Mali’s 6.8 million voters’ cards – known by the acronym Nina (num ro d’identit nationale) – had been collected since distribution began three weeks ago. He said the ministry would set up polling stations in refugee camps and it had done all it could to encourage displaced people to apply to transfer to polling stations in the areas where they currently live.
“We used television and radio advertisements and even traditional methods like griottes to encourage the displaced people. When a figure is given of 300,000 refugees, it includes children, who cannot vote, and people who may be 18 but who do not want to vote,” Dicko said.
But interviews with displaced people and aid workers supporting them suggest there is enormous interest in the presidential election, which may go to a second round on 11 August if there is no outright winner on Sunday.
The elections have been presented to Malians as a way of starting afresh after 20 years of misrule and corruption, which has left the vast expanses of the north of Mali underdeveloped and prey to illicit trades, including smuggling and hostage-taking.
Mali has an estimated population of 16 million, and is among the world’s five poorest countries, ranking 182 of 186 countries in the UN human development index. Children spend an average of two years in school and illiteracy among women has risen to 90%. Northern regions have been the scene of successive rebellions by the Tuareg people. Tuaregs and other northerners comprise a large proportion of those who will not be able to cast votes.
Guitarist Nasser Maiga, 25, has been living with relatives in Bamako since March last year, when he fled Gao after hearing that Islamist guerillas were carrying out house-to-house searches to punish musicians whose output they considered anti-Muslim. He said: “This election ought to be important for us, but I will not be able to vote. It is a big disappointment.”
His friend, Songhai musician Mdas, from Timbuktu, said he would be able to vote. “The government gave us a month to transfer our paperwork, and with various certified documents I managed to get my Nina card transferred to Bamako. But it was a complicated process and it did not work for everyone,” Mdas said.
Fadou Tour , a housewife from Goundam, near Timbuktu, has been living in a cousin’s garden in Bamako since April last year. “My sister is up there so I asked her to get my card in the hopes she could send it to me. She went last Sunday but they could not find it. Everyone in Bamako seems to be planning to vote so I am very disappointed.
Several aid workers confirmed the lack of voters’ cards among displaced people. One, in S gou, south-central Mali, said: “The displaced people have gone to great lengths to get their cards. Those who have the funds have sent a family member to their place of origin to collect everyone’s cards and bring them back. But travel is expensive. Buying food is the displaced people’s priority. I would say only about 15% of the displaced people I know have their cards now.”
A UN diplomat who wished to remain anonymous said the disenfranchisement of hundreds of thousands of people from the north risked dividing Mali politically. “The fact that displaced people and refugees will not be able to vote will play into the hands of separatists who do not recognise the Malian state. In the worst-case scenario, the National Movement for the Liberation of Azawad will be able to claim that a low voting rate in the north is proof that the region does not recognise the Malian state.”
News agency reports Garz n telling emergency services: ‘I hope there are no dead – they will be on my conscience. I want to die’
Several Spanish rail experts have voiced the opinion that mere negligence cannot explain Wednesday night’s crash: that the “black boxes” recovered from the train will show that a technical fault was partly – or perhaps entirely – to blame for what happened. But the arrest of the driver, Francisco Jos Garz n, and a steady trickle of extracts from the transcripts of conversations he held immediately after the disaster have increasingly focused attention on his role.
While still trapped in the cockpit of his train, the Alvia 151, he is said to have told the emergency service of Spain’s national rail company, Renfe: “I hope there are no dead, because they will be on my conscience.” He also reportedly said over and again: “We’re human.”
The Spanish news agency Europa Press reported that during the same conversation, though it was not clear in what context, Garz n had said: “I’ve fucked it. I want to die.”
His position also appeared to have been compromised by the emergence of a photograph he posted to his Facebook page showing his speedometer at 200km/h.. Garz n is, however, a driver of high-speed trains and he may have been on a stretch of the network where such a speed is permitted.
The photograph went up on 8 March 2012. Renfe’s president, Julio G mez-Pomar Rodr guez, said Garz n had worked on the Ourense-Santiago line for more than a year. Before that, he was on the line between Madrid and Barcelona, which is served by so-called AVE trains that can reach speeds of 310km/h.
The photograph nevertheless surprised Garz n’s friends. One wrote: “You’re going like the bloody clappers, lad. Brake.” The driver replied: “I’m at the limit. I can’t go faster, otherwise they’ll fine me.”
The photograph and the exchange of messages on Garz n’s Facebook page disappeared early on Thursday morning.
The driver of the ill-fated train was born 52 years ago in Monforte de Lemos, a town 70 miles inland from Santiago de Compostela. It was there that he began work for Renfe in his early 20s.
It was not until 2003, however, that he became a driver. Spain’s high-speed railway network was a prime symbol of the country’s prodigious economic growth after joining the European Union in 1986 and, like the other drivers on the network, Garz n is well qualified and regularly evaluated.
To be licensed for the AVE trains, or the slower but still fast Alvias, drivers must have either a higher technical diploma or the academic qualifications for university entry. They have to have spent at least four years driving conventional trains.
They then have to pass a special exam that includes tests designed to show that they are physically and psychologically fit for the job. Even if they pass, they are entrusted with a train only after having demonstrated that they have a full understanding of how it works and the line that it plies. AVE and Alvia drivers, moreover, must renew their licences every three years.
Garz n asked to be transferred to his native Galicia in Spain’s north-west because, he said, he wanted to be able to spend more time with his sick mother. But it was his mother who was at the train driver’s hospital bedside on the Thursday night as police, acting on orders from the investigating magistrate, stood guard nearby.
Manning’s attorney David Coombs told supporters on Thursday ‘tomorrow, you’re going to hear what the truth sounds like’
The defense was summing up its case on Friday in the court martial of Bradley Manning, the US army private who sent hundreds of thousands of US government documents to the anti-secrecy group WikiLeaks.
Manning’s civilian defense attorney David Coombs was giving his closing argument in the eighth week of the trial at the Fort Meade army base outside Baltimore. The case will then go to the judge for deliberations, who has said she could rule anytime in the next several days.
“Tomorrow, you’re going to hear what truth sounds like,” Coombs told supporters Thursday night after a lengthy and bruising final argument by the prosecution.
Speaking for more than five hours Thursday, with several breaks through the day for people to use the bathrooms and eat lunch, Major Ashden Fein told the court Manning was a traitor with one mission as an intelligence analyst deployed in Iraq in 2009 and 2010: to find and reveal government secrets to a group of anarchists, then bask in the glory as a whistleblower.
“The government has its job, but there is nobody who could believe what they said – much less them,” Coombs told a group of 40 supporters after Thursday’s session.
“If it takes six, seven hours to go on a diatribe and try to piece together some convoluted story … if it takes you that long to get your point across, you know it isn’t true,” Coombs told supporters in the courtyard of the court building as they were leaving for the day.
He said his closing arguments would likely last about two hours Friday and that he is “going to speak from the heart – it won’t be hard for me to rebut.”
Coombs has said the soldier was troubled by what he saw in the war – and at the same time was struggling as a gay man in the era of “don’t ask don’t tell”. Those struggles made him want to do something to make a difference and he hoped revealing what was going on in the war zone and US diplomacy would inspire debate and reform in American foreign and military policy, Coombs has said.
Fein said Manning betrayed his country’s trust and spilled classified information, knowing the material would be seen by the terrorist group al-Qaida.
“WikiLeaks was merely the platform which Pfc Manning used to ensure all the information was available for the world, including enemies of the United States,” Fein said.
Manning, 25, is charged with 21 offenses, but the most serious is aiding the enemy, which carries a possible sentence of up to life in prison. A native of Crescent, Okla., Manning has acknowledged giving WikiLeaks 700,000 battlefield reports, diplomatic cables and videos. But he says he didn’t believe the information would harm troops in Afghanistan and Iraq or threaten national security.
A military judge, not a jury, is hearing the case at Manning’s request. Army colonel Denise Lind will deliberate after closing arguments.
The verdict and any sentence will be reviewed, and could be reduced, by the commander of the Military District of Washington, currently Major General Jeffery S Buchanan.
Police operation in coastal suburb near capital is described as one of the biggest ever anti-mafia sweeps in Rome area
As temperatures soar to around 40C this weekend, thousands of Romans will flock to nearby beaches to roast in the sun, play on the slot machines and dance in sticky seaside nightclubs. They will not be the only ones feeling the heat.
On Friday in an operation that prosecutors said revealed the extent of organised crime in the coastal suburb of Ostia near the Italian capital, 51 people were arrested on suspicion of mafia-related activity.
The crackdown, which involved about 500 police officers as well as dog support units, patrol boats and a helicopter, was described as one of the biggest anti-mafia sweeps ever carried out in the Rome area.
Its aim was to hit at the heart of gangs that prosecutors say have been carving up the coastal territory and sharing its considerable spoils for the past 20 years.
Located about 15 miles south-west of the capital near Leonardo da Vinci airport, Ostia’s sandy beaches prove a popular weekend destination for city-dwellers seeking to escape Rome’s stifling heat.
Particularly targeted in the operation on Friday were members of three clans – the Fasciani, Triassi, and D’Agati – whom investigators suspect of carrying out criminal activities including drug trafficking and extortion.
The Triassi are believed to have close ties to the Sicilian mafia. The website of Il Fatto Quotidiano, a daily newspaper, headlined the raids: “Welcome to Cosa Nostra beach”.
The alleged infiltration by criminal networks in Ostia’s political administration emerged this month when police raided the town hall’s permit office and placed an employee and local contractors under investigation on suspicion of rigging bids for beach contracts in favour of another mafia clan, the Spada.
The move prompted Rome’s new mayor, Ignazio Marino, to announce that permits to manage Ostia’s coastline would henceforth be handled directly from the capital. He said his administration would fight to curb “the underworld infiltration” of Ostia.
“In recent years, the Roman coastline has become fertile ground for criminal activities, the scene of bloody clashes between clans and criminal gangs who seek to control significant parts of the city’s economy,” he said.
One of the most startling incidents in the increasingly bloody turfwar in Ostia came in November 2011 when two criminals, Giovanni Galleoni and Francesco Antonini, were shot dead in the town centre in broad daylight.
In a separate but equally dramatic anti-mafia operation on Friday morning, police in the southern region of Calabria made dozens of arrests in the city of Lamezia Terme, about 40 miles south of Cosenza, some of which concerned a suspected car-crash scam in which payouts were allegedly used to provide criminals with drugs and arms.
Police said the raids had targeted a panoply of local people suspected of involvement in the scheme, ranging from insurers and lawyers to car repairers. There were also arrests of suspected hitmen on suspicion of several killings between 2005 and 2011, police said.
A Calabria senator in the former prime minister Silvio Berlusconi’s centre-right Freedom People (PdL) party was being investigated for suspected vote-buying but had not been arrested, they added.
Guido Marino, police chief in nearby Catanzaro, said the raids revealed a flourishing criminal system in the city that had drawn in not only fully paid-up members of criminal gangs but “professionals above suspicion”.
“This was a mafia system which not only bloodied Lamezia Terme with murders but which also bled dry a part of [the city’s] already fragile economy,” he was quoted as telling the Ansa news agency.
Calabria, one of Italy’s poorest regions, is the home to the ‘Ndrangheta, now Italy’s most formidable organised crime syndicate, which has grown far beyond its southern origins into a hugely powerful force thought to control much of the cocaine trade in Europe.
Ohio man – charged with 997 counts including kidnap and rape – agrees deal with prosecuctors that will spare him death penalty
A man accused of abducting three woman and holding them captive at his Ohio home for a decade pleaded guilty to multiple charges on Friday, as part of a plea deal that spared him from a death sentence.
Ariel Castro – charged with 977 counts over the kidnap, rape and brutal treatment of Amanda Berry, Gina DeJesus and Michelle Knight – agreed a deal with prosecutors under which he will serve life without parole, plus 1,000 years.
Asked in court in Cleveland, Ohio on Friday if he understood that he would spend the rest of his days behind bars, he replied: “I do understand that, your honour”. He added: “I knew I was pretty much going to get the book thrown at me.”
Castro, 53, had been due to stand trial over an indictment sheet that included two counts of aggravated murder over allegations that he punched and starved one of his captives until she miscarried.
The three victims – all of whom disappeared between 2002 and 2004 – escaped on 6 May, when one of them kicked out part of a door while being aided by a neighbour alerted to her screams for help.
The women were 14, 16, and 20 when they were abducted by Castro, a former school bus driver. Relief over their escape earlier this year quickly turned to horror as details emerged of their ordeal at his home in Cleveland.
For about a decade, Castro repeatedly abused them and kept them hidden from the world, often chaining them to a bedroom heater or a pole in his basement, prosecutors said.
Berry gave birth to a child, now six years old. On the day the daughter was born, Castro raped one of the other women, who had helped deliver the baby.
Other pregnancies never went to full term. Knight told prosecutors that she became pregnant five times but was starved and beaten up by Castro so she would miscarry.
Earlier this month, the three victims posted a video on YouTube, to thank the public for the support they had received since escaping from Castro’s house. “I may have been through hell and back, but I am strong enough to walk through hell with a smile on my face and my head held high,” Knight said.
She added: “I will not let the situation define who I am, I will define the situation. I don’t want to be consumed by hatred.”
Castro, who was picked up by police soon after Berry escaped the home, had initially intended to plead not guilty. If the case had gone to trial, the victims would probably have had to testify in court about their ordeal.
Prosecutors had the option of pursuing the death penalty in the case. But under the plea agreement announced on Friday, that option was ruled out.
Hope is tempered by caution both among Iranians and in the west, where some see an opportunity to repair relations
A young Iranian couple, Masoud Bastani and Mahsa Amr-Abadi, both journalists and both imprisoned on account of their writing, have seen very little of each other for the past four years. Like many Iranian prisoners they were granted occasional temporary releases, but officials always made sure they were not allowed out at the same time.
“The authorities wanted to make life yet more miserable for the two, like an extra punishment,” said one of their friends. Their convictions were for colluding and spreading propaganda against the state, a frequent charge against dissidents and independent journalists. This month, however, Bastani and Amr-Abadi were reunited at their house in Tehran, and pictures on Facebook showing the smiling couple embracing one another delighted their friends and followers.
Their newfound happiness is one of a number of small signs of change after the election in June of President Hassan Rouhani, a veteran pragmatist who ran on an ambitiously reformist platform. With a week until Rouhani’s inauguration, such signs have fuelled hope that a peaceful “Iranian spring” could be on the way, reversing the intensifying repression of the last eight years under Mahmoud Ahmadinejad.
Yet those hopes are tempered by bitter experience. Green shoots of civic freedoms and human rights were even more apparent under the last reformist president, Mohammad Khatami, and at the peak of the 2009 opposition Green movement, only to be emphatically quashed by conservatives in the regime and security forces.
There is even greater caution in the west about the possibility of a better relationship with Tehran and perhaps even a deal to defuse the long and dangerous standoff over Iran’s nuclear aspirations. National security and the nuclear programme in particular are very much the preserve of the supreme leader, Ali Khamenei. But optimists hope that the intense economic pressures on Iran – amplified by severe US and European sanctions – that helped carry Rouhani to victory will drive the regime towards a historic compromise.
Rouhani has not yet formed a government, so the hopes and doubts swirling around his presidency are based mostly on speculation. However, Iranians report that since the election there has been a distinct thaw in the air.
Bastani and Amr-Abadi are not alone. More temporary releases have been handed out and a handful of the political prisoners recently granted leave have been told they need not return to jail provided they stay out of trouble. Others have been told they will be released on Eid al-Fitr, the holiday next month marking the end of Ramadan. Those on trial for political offences say they have been promised acquittal or light sentences. One recently released activist said his interrogators had been noticeably more polite, as if sensing the winds of change.
The new mood has been apparent among the police on the street. As millions of jubilant Iranians poured on to the streets to celebrate Iran’s qualification for the 2014 World Cup days after the election, the police tolerated public music, dancing and slogans chanted in favour of imprisoned opposition leaders, which would have been suppressed only days before.
Last week 25 independent Iranian documentary film-makers accused of working clandestinely inside the country for the BBC’s Persian service were all acquitted, even though at least 10 of them had previously been found guilty. The film-makers were alleged to have supplied the BBC with information, footage, news and reports misrepresenting Iran, leading to fears some would be charged with espionage. However, the country’s cinema organisation, affiliated to the powerful ministry for culture and Islamic guidance, surprised many by ruling that “none of the works was found to be propaganda against the ruling system and none contained anti-revolution material”.
At the same time, local media appear to be pushing back previously rigid boundaries. The semi-official Isna news agency broke a taboo by printing the names of opposition leaders under house arrest.
Summing up the popular mood, the former president Ali Akbar Hashemi Rafsanjani, who was blocked from standing in the election, said on Thursday: “The election’s result has brought hope, peace and rationality to our country.”
Even as they celebrate, many Iranians acknowledge they may be suffering from over-exuberance in view of the limited real changes to date and their extreme fragility. On Facebook and Twitter, the two-word post-election chant “Rouhani Mochakerim” (Rouhani thank you!), is increasingly used ironically as universal expression of gratitude for everyday occurrences (“My brother just passed his exams – Rouhani thank you!”).
The past few weeks have not just been a series of prisoner releases. There have been occasional political arrests too, such as that of the journalist Fariba Pajouh.
Faraz Sanei, of Human Rights Watch, said it was too early to declare a new Iranian spring on the basis of a few rays of sunshine. “Rouhani’s win was certainly a surprise to most analysts, but it is not an indication that reformists will have the upper hand during the next four years,” he said.
Rouhani’s impact on Iran’s relations with the rest of the world is even harder to predict. Khamenei set the tone for national security and foreign policy in the Ahmadinejad era and made clear during the election campaign that he did not intend to change under the new president.
There are signs that the regime intends to use Rouhani’s softer image to try to win more friends abroad. The government has broken with previous practice to invite foreign leaders – with the exceptions of US and Israel – to the inauguration next Sunday.
The foreign ministry even mounted something of a charm offensive in the direction of the UK, seen in ruling circles as Iran’s third worst adversary. On the occasion of the birth of Prince George, the ministry spokesman Abbas Araghchi, a UK-educated fluent English speaker, offered congratulations to the Queen and the Prince of Wales.
The conservative backlash to those comments, however, served to underline the scale of the challenge facing the new government in attempting a rapprochement with the west. Araghchi was fiercely criticised by parliamentary rightwingers, and state TV broadcast a furious diatribe describing the Queen as an “iron-fisted dictator” who chose members of parliament and filled key positions by appointment. “England has one of the most reactionary and medieval forms of governments,” the report from London declared.
Ali Ansari, professor of modern history at Saint Andrews University, said the regime would ultimately have to resolve its contradictory views on dealing with the west. “The conservatives seem to think that Rouhani’s election will change international perceptions overnight,” Ansari said. “But if they think that a smiling Rouhani will get sanctions lifted and everything will be hunky dory without giving something substantial to the west, they may be surprised.”
The mixed messages emanating from Tehran have deepened divisions in the west over how to respond to the dawning of the Rouhani age. The UK government has opted not to send officials to the inauguration, arguing that to do so would be to break with the common EU position that only local ambassadors should attend. (The UK has not had a diplomatic presence in Tehran since its embassy was stormed by a mob in November 2011.)
That decision was quickly condemned by the shadow foreign secretary, Douglas Alexander, as “a misjudgment and a missed opportunity”. Ben Wallace, Conservative chairman of the British-Iran parliamentary group, also voiced concern that western mis-steps could undermine the new president. “Rouhani has a real task ahead. He has to balance the politics inside Iran while at the same time trying to bring Iran into the mainstream of the international community,” Wallace said. “The danger for him and for peace is if the US and the UK move the goalposts
and are seen to be hypocritical in support of repressive Sunni regimes yet tough on the Shia nation of Iran.”
The uncertainty over how to respond to Rouhani’s rise is even more pronounced across the Atlantic. According to the New York Times, the Iraqi prime minister, Nouri al-Maliki, passed a message purportedly from Rouhani to the White House, saying that the new president was interested in direct negotiations. As an apparent sweetener to encourage such sentiments, Washington has tweaked its draconian sanctions to allow the transfer of more medical equipment. At the same time, however, the Republican-run House of Representatives is preparing to vote on the imposition of even more stringent sanctions before going on its August recess. A joint letter by two retired senior US officers, General Joseph Hoar and Colonel Lawrence Wilkerson, and Trita Parsi, head of the National Iranian American Council, published on The Hill’s congressional blog said: “Rouhani’s election represents what could be the last best hope for serious negotiations with Iran to produce a diplomatic resolution to the nuclear dispute. . “The House must not snuff out hopes for Iranian moderation before Rouhani even gets a chance.”
LGBT activists target brands including Stolichnaya and Russian Standard in response to ban on ‘gay propaganda’
There’s nothing more Russian than vodka, so when gay and lesbian activists decided to protest against the country’s persecution of homosexuals it made sense to target its most famous drink.
The US sex writer Dan Savage, famous for his online campaign against the homophobic senator Rick Santorum, called for a vodka boycott to draw attention to new laws allowing police officers to arrest tourists and foreign nationals they suspect of being homosexual or “pro-gay”.
“To show our solidarity with Russian queers and their allies and to help to draw international attention to the persecution of gay men, lesbians, bisexuals, trans people and straight allies in Vladimir Putin’s increasingly fascistic Russia: dump Russian vodka,” Savage wrote on his blog, He singled out the brands Stolichnaya and Russian Standard, coining the hashtag #DumpStoli for the campaign, which has been backed by Queer Nation and the Russian-American group Rusa LGBT.
Savage said attacks on LGBT people in Russia were escalating, and criticised the state for banning gay pride marches in Moscow and St Petersburg.
Six bars in Chicago announced they would stop selling Russian products, and a seventh bar said it had withdrawn Stolichnaya, according to Windy City Times, a Chicago LGBT newspaper.
The campaign seemed to have an instant success when the manufacturers of Stolichnaya criticised Russia’s record on lesbian and gay rights.
In an open letter published this week, Val Mendeleev, the head of the SPI group, condemned the Russian government for “limiting the rights of the LGBT community” and noted that the Russian state has no ownership or control of the brand, which is produced in Latvia.
On its Facebook page, the company posted a multicoloured banner reading: “Stolichnaya Premium Vodka stands strong and proud with the global LGBT community against the actions and beliefs of the Russian government.”
Stolichnaya, with its distinctive red-and-white label, was produced by the state in Soviet times and was reportedly the favourite vodka of Boris Yeltsin. After an attempt by the Russian state to regain the brand name in the 2000s, SPI Group, which is based in Luxembourg, has produced Stolichnaya in Latvia using Russian ingredients. Meanwhile, the state-owned Soyuzplodimport produces a nearly identical vodka in Russia.
Russia’s leading gay rights activist said the boycott was misguided.
“They mixed everything up. Stolichnaya isn’t Russian,” said the lawyer Nikolai Alekseev, head of the Moscow Pride organising committee.
“This is all good for attracting attention to the situation in Russia, like any other action, such as boycott of the Olympics, but it will not drastically change anything,” he added.
Unlike Stolichnaya, Russian Standard vodka is produced in Russia and is owned by the Russian oligarch Roustam Tariko. A spokesman for the company declined to comment.
In June Russia’s parliament unanimously passed a law banning the spreading of “propaganda of non-traditional sexual relations” among minors, prompting calls for other countries to boycott the 2014 Winter Olympics in Sochi.
The law in effect makes it illegal to equate straight and gay relationships, and to distribute material on gay rights. It introduces fines for individuals and media groups found guilty of breaking the law, as well as special fines for foreigners. Four Dutch activists were charged in Murmansk this week under the law.
This is not Savage’s first controversial LGBT campaign: in 2003, he held a contest to create a definition for “santorum” after Santorum made comments critical of gay marriage. The new word was defined as “the frothy mixture of lube and faecal matter that is sometimes the byproduct of anal sex”.