Highwaymen in Uniform

  Imagine the moment you pull into the parking lot at a gun show, your license plate goes into a federal database.
This week, the ACLU released a trove of documents from the Drug Enforcement Administration (DEA) obtained under the Freedom of Information Act. The documents are incomplete and heavily redacted… but they reveal the feds have been building a database tracking the real-time movement of vehicles nationwide.
Ordinarily, we’d leave a matter like this to colleague Chris Campbell from our sister e-letter Laissez Faire Today. But Chris has been on assignment in Thailand the last two weeks, experiencing the medical tourism phenomenon firsthand.
So we’ll take the baton here in The 5 today. Besides, how much freedom do we have to invest and conduct commerce as we choose… if we’re forever under surveillance?
  The documents reveal the DEA launched the tracking program in 2008, using automated license plate readers.

The following year, the DEA’s Phoenix office began planning a project with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to track the comings and goings from public gun shows using the tracking technology.
The DEA says it never followed through on the plan… although right now, we have only their word. And the documents raise more questions than they answer. “We just happened to get that tidbit about the gun shows,” the ACLU’s Jay Stanley tells The Guardian. “Whether they targeted other groups we just don’t know. That’s the problem. We’re like archaeologists trying to read a scrap of bone and build a picture of the whole organism.”
We’ll pause here in case you need a moment to wrap your mind around the ACLU sticking up for the rights of law-abiding gun owners.
[Pause…]
While many details remain murky, we know hundreds of millions of records have been uploaded to the database. “It’s deeply concerning and creepy,” says Clark Neily from the Institute for Justice. “We’re Americans. We drive a lot.”
 The tracking program is not about drugs or guns; it’s about revenue. Specifically, the revenue from civil asset forfeiture.
It’s right there in one of the DEA documents. “The primary goal of the license plate tracking program,” summarizes The Wall Street Journal, “is to seize cars, cash and other assets…”
The problem with asset forfeiture, as we’ve chronicled now and then, is you don’t need to be convicted or even accused of drug trafficking for the government to seize your property. It’s your property that’s judged guilty and confiscated, and your property doesn’t get any due process.
  The place where you might be most vulnerable to forfeiture is in your car — where modern-day highwaymen in uniform can prey upon you.

William Davis and John Newmerzhycky know this all too well. In April 2013, they were driving through Iowa on their way home to California from a World Series of Poker tournament. They were pulled over for failure to signal a lane change. By the time the “routine traffic stop” was over, the cops seized the men’s winnings — $100,000 in cash.
Because large sums of cash are always guilty. Or something like that.
Bonus points: The dashcam video from the police cruiser reveals the driver did signal his lane change. That came out during the subsequent lawsuit. The men got $90,000 back… but a third of it was eaten up by legal fees.
Nor do you have to be hauling briefcases of cash to be vulnerable. The Institute for Justice — which litigates big-ticket forfeiture cases — says the typical seizure is for less than $500. Small enough to fit in your wallet… and not enough for most people to justify a court fight.
  Law enforcement agencies that seize property via forfeiture can spend the loot on “just about anything under a law enforcement agency’s roof,” according to Roy Hain — a former sheriff’s deputy from Kane County, Illinois, writing under the pseudonym of Charles Haines.
Understand, Mr. Hain is not alerting you to the risk of forfeiture — he’s advising the modern-day highwaymen on how to seize more loot.
Hain is marketing director for a private firm called Desert Snow. As The Washington Post explained in a lengthy expose last fall, Desert Snow trains legions of lawmen in seizure techniques. The firm brags its graduates seized $427 million during traffic stops in a single five-year stretch.
With that kind of money at stake for them, you become a moving target.
  We try to give you something “actionable” each day in The 5 an ETF you might want to buy, a market sector to avoid or — if we’re engaged in truly shameless commerce — an invitation to click on one of our sales promotions.
Today is no different: Do not yield to the temptation to throw up your hands and feel helpless.
True, there’s only so much that’s within your control when it comes to the highwaymen in uniform. But with that in mind, we offer a few common-sense guidelines…

  • First, know when you’re on the road that the cops consider nearly every Interstate highway a “regional drug transportation corridor.” Seriously. Here’s a map we lifted straight from the Justice Department’s website
  • Keep your car “clean.” Make sure all your taillights, brake lights, license plate lights, etc., are in working order. You might still get pulled over like the guys in Iowa, but you don’t want to give the police an excuse
  • Maybe it’s unavoidable, but try not to carry more than $500 cash
  • And once the trooper gives you your warning or ticket and sends you on your way, don’t fall for the Columbo trick. That’s what happened to Davis and Newmerzhycky: They were about to resume their journey when the trooper asked, “Do you have time for a couple of questions?” Everything went downhill from there.

Desert Snow trains officers in this very technique. See, once you’re free to go, the law considers any further interaction with law enforcement to be “consensual” — even if it doesn’t feel that way to you, seeing as the cop is the one with the badge and the gun.
Finally… You might be asked the ambiguous, “You don’t mind if I have a look in your car?” The unambiguous answer to give, according to the invaluable Flex Your Rights website, is: “I do not consent to any searches.”
[Ed. note: We mentioned two weeks ago how Attorney General Eric Holder had announced a shift in federal forfeiture policy. We were a bit skeptical… and since then, it’s emerged that more than 86% of the money state and local law enforcement get through federal forfeiture will be unaffected. Some reform, huh?]
  To the markets: The Commerce Department has issued its first guess at fourth-quarter GDP — an annualized 2.6%, less than the “expert consensus” was counting on.
Now… traders could interpret this number one of two ways…

  • “Hey, the economy sure looks slow. Maybe the Federal Reserve will hold off raising interest rates — more free money for us! Buy!”
  • “Hey, why is the economy so damn slow? It ought to be doing better than this! It’s bad for earnings. Sell!”

Traders have opted for the latter interpretation: As we write, the major U.S. stock indexes are all in the red after notching healthy gains yesterday. The S&P 500 is off half a percent as we write, to 2,010.
Hot money is flowing into Treasuries: You can lend your money to Uncle Sam for 30 years and earn a record-low 2.24% today. Gold is also perking up, the bid at $1,276.
In earnings land, Amazon reported quarterly sales growth below what most analysts had forecast. But it also reported a profit despite ever-rising costs, so shares are being bid up. Go figure.
  Meanwhile, one of the “Titans of Finance” just made six times its money on a deal.

Our income specialist Zach Scheidt told us about these Titans yesterday — money managers who cater to the super-rich but who also float shares to retail investors. We spotlighted one of his picks, Blackstone Group (BX).
No sooner did we hit the “send” button than Zach passed along word that Blackstone has recorded a six-bagger in its portfolio.
“In 2006,” Zach explains, “Blackstone purchased Center Parcs, a U.K. resort company, for $310 million. Over eight-plus years, Blackstone spent more than $150 million updating Center Parcs’ hotels, restaurants and stores. Blackstone’s total investment in Center Parcs is a bit more than $490 million. Now it’s selling its shares for about $3.8 billion. That’s a gain of nearly 670%.”
Zach has raised his buy-up-to price on BX, as he still anticipates the firm selling tens of thousands of single-family homes it bought for pennies on the dollar during the housing crisis. For access to all of Zach’s Lifetime Income Report recommendations, look here.
  And now a reason to cheer for New England during the Super Bowl on Sunday — “Deflategate” notwithstanding.

“NFL owners are professionals at extracting taxpayer money from local fans to fund generous subsidies for their lavish stadiums, and the NFL is tax-exempt,” writes the Manhattan Institute’s Jared Meyer. “But Patriots owner Robert Kraft took a different, more taxpayer-friendly, approach and arranged 100% private funding for the construction and maintenance of Gillette Stadium.”
In Seattle, on the other hand, nearly two-thirds of CenturyLink Field’s cost was government financed, says Mr. Meyer. Heck, Seattle taxpayers are still paying off the bonds from the old Kingdome — which was demolished in 2000.
  Elsewhere, Mayor Jerry Weiers of Glendale, Arizona — site of the game this weekend — has brought refreshing candor to an interview in ESPN The Magazine: “I totally believe we will lose money on this.”
Weiers bases his assessment on his city’s experience hosting the 2008 Super Bowl. Then, he suggested city government likely lost over a million dollars (which prompted Arizona Cardinals president Michael Bidwill to call that “a bunch of malarkey”).
ESPN crunched the numbers, and they bear out Weiers’ assessment: “Glendale said it spent $3.4 million in 2008, mostly on public safety, and earned only $1.2 million in taxes from direct spending at places like hotels and restaurants.”
What about ticket sales, you ask? Glendale doesn’t collect any tax on those. For real…
  “Who pays for these $10,000-per-month drugs?” a reader asks after Stephen Petranek’s optimistic take on the biotech sector in this space on Tuesday.
“With the Feds now running heath care, how long do you think this will be sustainable?
“This market has a clock ticking on it. Grab your money short term and run.”
  “There is only so much money that this nation can afford to spend on drugs,” Stephen acknowledges.
“If every new drug that comes along gets priced the way some of our newest drugs have been, the biotech capitalization is unsustainable. I’m thinking, for example, of the hepatitis C cures that cost nearly $100,000.”
And he’s thinking of some of his own recommendations in Breakthrough Technology Alert. “There’s clearly something of a bubble in our expectations about how many biotech companies can be successful and how much we can pay for their brilliant therapies,” says Stephen. Rest assured he’s keeping an eagle eye on the portfolio…
  “For a change,” a reader writes after we made an offhand remark yesterday, “I agree with Washington being worried about ethnic Russians in Ukraine wanting independence.
“If they get it, then it’s all the more likely that ethnic Russians in the Baltics will want the same. And that would be wrong not only for strategic reasons, but also because the only reason they’re even there is because Russia shipped them in when they invaded as a way to strengthen their power. It would mean Russia would continue this abhorrent behavior with the next land they want to invade.”
“Why,” writes another reader, “is Washington threatened by some Mexicans living in California and Texas demanding some measure of autonomy from the junta in D.C.? Or why didn’t Washington allow the South to secede? We don’t have to go clear across the Atlantic and then some to ponder this question. Perhaps, just perhaps, it has to do with non-Russians also living in those same areas?”
The 5: Tortured analogies for $1,000, Alex.
We get how the ethnic and religious groups in the former Soviet Union are intermixed. For sure, it’s a volatile stew. But so what?
Three successive presidents broke Bush the Elder’s promise to Gorbachev that NATO would not expand beyond its 1989 boundaries. Clinton brought in some of the Warsaw Pact countries, Bush the Younger expanded NATO up to Russia’s borders, and Obama is maneuvering to reel in Ukraine.
But Putin is the villain for feeling encircled and drawing the line at a NATO naval base in Crimea?
As we said on Wednesday, we’re staring down the prospect of war between the United States and Russia this year.
And there’s a “reality bubble” surrounding the Beltway and the elite media far worse than anything that preceded the Iraq War in 2003. The only establishment figure talking sense is the aging war criminal Henry Kissinger: “If the West is honest with itself, it has to admit that there were mistakes on its side,” he told Der Spiegel late last year. “The annexation of Crimea was not a move toward global conquest. It was not Hitler moving into Czechoslovakia.”
Alas, he was allowed to say that only in European media. Not in the USSA.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. As we go to virtual press, crude has shot up 7%, to $47.67. We’ll get a handle on what’s behind the move — if anything — and get back to you on Monday.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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