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Skulls are Valued at an All-Time High

CATEGORY: Bones, Skeleton Supply

DIVISION: Products

COMMENTARY: As we've been explaining to customers for months now, the bone trade is a tricky business. Our skull supply has been spotty at best - and for this we apologize.

The following article captures the difficulties we face - we encourage our customers to give it a read and be patient with us. Thank you for your understanding.

Inside India's Underground Trade in Human Remains

By Scott Carney

A constable in a sweat-stained undershirt and checkered blue sarong lays a ragged cloth over a patch of mud. He jerks open the back door of a decrepit Indian-made Tata Sumo SUV — what passes for an evidence locker at this rustic police outpost in the Indian state of West Bengal. A hundred human skulls tumble out onto the cloth, making a hollow clatter as they fall to the ground. They've lost most of their teeth bouncing around the back of the truck. Bits of bone and enamel scatter like snowflakes around the growing pile. Standing next to the truck, the ranking officer smiles and lets out a satisfied grunt. "Now you can see how big the bone business is here," he says. I crouch down and pick up a skull. It's lighter than I expected. I hold it up to my nose. It smells like fried chicken.

Before the authorities intercepted it, this cache was moving along a well-established pipeline for human skeletal remains. For 150 years, India's bone trade has followed a route from remote Indian villages to the world's most distinguished medical schools.

Skeletons aren't easy to get. In the US, for instance, most corpses receive a prompt burial, and bodies donated to science usually end up on the dissection table, their bones sawed to pieces and destined for cremation. So most skeletons used for medical study come from overseas. Often they arrive without the informed consent of their former owners and in violation of the laws of their country of origin.

U.S. institutions pay a hefty price for human bones.

India has long been the world's primary source of bones used in medical study, renowned for producing specimens scrubbed to a pristine white patina and fitted with high-quality connecting hardware. In 1985, however, the Indian government outlawed the export of human remains, and the global supply of skeletons collapsed. Western countries turned to China and Eastern Europe, but those regions produce relatively few skeletons. They have little experience producing display-quality specimens, and their products are regarded as inferior.

Now, 22 years after India's export ban, there are signs that the trade never ended. Black-market vendors in West Bengal continue to supply human skeletons and skulls using the time-honored method: Rob graves, separate soft flesh from unyielding calcium, and deliver the bones to distributors — who assemble them and ship them to dealers around the globe.

Exports to North America are still small compared with pre-ban levels, but shipments are finding their way to American medical programs. Suppliers have ample incentive — it's a lucrative business. The skulls on the ground before me, for instance, would fetch an estimated $70,000 overseas.

The constable grabs the cloth by its corners and gathers the evidence into a bundle. "You know, I've never seen anything like this," he says. "I hope I don't again."

A massive low-pressure system over the Bay of Bengal is threatening to flood the state of West Bengal. Newspapers have already dubbed the storm a "watery apocalypse" after eight people drowned in floods before it even touched land. I'm driving to the tiny village of Purbasthali — about 80 miles outside of Kolkata, the state capital — the site of the processing plant where the police discovered their load of skulls. My rented Toyota Qualis gets stuck in the mud half a mile from the facility, so I jump out to make my way on foot. The sky is pitch-black, the rain suffocating. Toads the size of boxing gloves hop across the muddy track.

When police arrived to investigate last spring, they could smell the stench of rotting flesh from nearly a mile away. Sections of spine strung together with twine dangled from the rafters, an officer told me. Hundreds of bones were scattered on the floor in some sort of ordering system.

This bone factory had been operating for more than 100 years when two of its workers, drinking at a bar, bragged that they were hired to dig bodies out of graves. Shocked villagers dragged them to a police station, where they confessed. The workers said a man named Mukti Biswas ran the factory. The authorities knew him well. In 2006, police had arrested Biswas as the kingpin of a grave-robbing ring; he was released a day later, news reports said, "because of his political links." The police took him into custody once again, but he was let out on bail and has since taken flight.

After 10 minutes of slogging through the mud, I make out the flicker of a gas lamp. I peek into the doorway of a wood-frame house. A family of four sitting on the dirt floor stares back at me.

"Do you know Mukti Biswas?" I ask.

"The bastard still owes me money," replies Manoj Pal, a twentysomething man with a thin mustache. His family has been working at the bone factory for generations, he says. He offers to show me around, and we head out along the bank of the Bhagirathi River.

The processing plant is little more than a bamboo hut with a tarpaulin roof — one of a dozen bone factories Pal says he knows about. In April, the authorities confiscated piles of bones, buckets of hydrochloric acid, and two barrels full of a caustic chemical they have yet to identify. All that's left is a dirt floor with a large concrete vat sunk into the ground.

A third-generation bone trader, Biswas had no problem finding dead bodies. As caretaker of the village's cremation ground, he claimed to have a license to dispose of the dead. But police told reporters he was robbing graves. Biswas pilfered corpses from cemeteries, morgues, and funeral pyres; he would drag the deceased from the flames as soon as the families left. He employed almost a dozen people to shepherd the bones through the various stages of de-fleshing and curing. For this work, Pal says he earned $1.25 a day. He also received a bonus for keeping the bones from a given body together so they represented a biological individual rather than a mishmash of parts — a feature prized by doctors.

Pal explains the factory's production process. First the corpses were wrapped in netting and anchored in the river, where bacteria and fish reduced a body to a loose pile of bones and mush in a week or so. The crew then scrubbed the bones and boiled them in a cauldron of water and caustic soda to dissolve any remaining flesh. That left the calcium surfaces with a yellow tint. To bring them up to medical white, bones were then left in sunlight for a week before being soaked in hydrochloric acid.

Biswas sold complete skeletons wholesale for $45 to a medical supply company called Young Brothers, which wired the pieces together, painted on medical diagrams, and sawed away sections of the skulls to reveal internal structures. Then Young Brothers sold the bones to dealers around the world.

Shining my flashlight on the floor, I pick up a wet rag. The translator lets out a low hiss. "I hope you know that's a death shroud," he says. I drop the cloth and wipe my hand on my shirt.

The empirical study of human anatomy took off with Leonardo da Vinci's sketches in the 15th century; the earliest extant articulated skeleton dates from 1543. As medicine advanced, physicians were expected to have a systematic understanding of the human body's inner workings. By the beginning of the 19th century, Europe's demand for human remains far outstripped supply.

In England, home of many of the world's preeminent medical institutions, grave robbing became so commonplace that certain cemeteries were famous for battles between grieving families and marauding medical students. To contain the problem, the government passed the Anatomy Act of 1832, allowing doctors to take any corpse that was left unclaimed in a city morgue or hospital. The law put an end to grave robbery, but the supply of legal skeletons still couldn't keep up with demand. So British doctors looked to the colonies. In India, members of the dom caste, who traditionally performed cremations, were pressed into service processing bones. In the 1850s, Calcutta Medical College processed 900 skeletons a year, mostly for shipment abroad. A century later, a newly independent India dominated the world market for human bones.

In 1985, the Chicago Tribune reported that India had exported about 60,000 skulls and skeletons the year before. The supply was sufficient for every medical student in the developed world to buy a bone box along with their textbooks. Price: $300.

If most of the merchandise was stolen, at least exporting it was legal. "For years, we ran everything aboveboard," Bimalendu Bhattacharjee, a former president of the Indian Association of Exporters of Anatomical Specimens, told the Los Angeles Times in 1991. "No one advertised, but everyone knew it was going on." At their height, Kolkata's bone factories took in an estimated $1 million a year.

But it couldn't last. The graveyards of West Bengal were being picked clean, and the lure of ready money soon attracted criminal elements.

The industry shuddered to a halt in March 1985, when a bone trader was arrested after exporting 1,500 child skeletons. Because they're relatively rare and illustrate transitional stages in osteological development, child skeletons command higher prices. Indian newspapers claimed that children were being kidnapped and killed for their bones.

Panic spread with news of the arrest. In the months after the indictment, vigilantes combed the cities searching for members of the alleged kidnappers' network. In September, an Australian tourist was killed and a Japanese tourist was beaten by a mob after rumors spread that they were involved in the conspiracy. The attacks might have been enough to stall India's bone industry, but the government had already taken action: A few weeks earlier, India's Supreme Court interpreted the national Import/Export Control Act to prohibit the export of human tissue.

In the absence of competing suppliers in other countries, the court's decision effectively shut down international trade in human skeletons. Medical schools in the US and Europe begged the Indian government to reverse the export ban, to no avail.

Since then, natural human bone has been difficult to come by. The voracious demand for fresh cadavers in medical education consumes nearly all donated corpses in the US, and in any case, processing skeletons is a slow, messy business that few people care to take on. When high-quality specimens do become available, they tend to be costly. A complete skeleton in good condition now retails for several thousand dollars, and orders can take months, even years, to fulfill. Students no longer buy their own bone boxes; instead, schools usually keep an inventory that's replaced only when specimens are damaged or stolen. Stanford Medical School allocates half a skeleton, cleaved down the middle, for every two students. Such policies mean that many established institutions already have all the bones they need. The biggest buyers of skeletons are new and growing schools throughout the world that need to outfit their labs.

Some institutions have turned to plastic replicas. But artificial substitutes aren't ideal. "Plastic models are reproductions of a single specimen and don't include the range of variations found in real osteology," says Samuel Kennedy, who stocks the anatomy program at Harvard Medical School. Students trained on facsimiles never see these differences among individuals. Moreover, the models aren't entirely accurate. "The molding process doesn't capture the detail of a real specimen," Kennedy adds."This is especially critical in the skull."

In the US, major dealers like Kilgore International are making do selling replicas. "My father would have done almost anything to get back into the bone business," says Craig Kilgore, who runs the company his father founded. "He was legally blind but would still come to the office and write letters to anyone, anywhere in the world, that he felt could be of help to reopen the supply." His father, who died in 1995, didn't live to see the turnaround.

Tucked away on a side street between one of Kolkata's largest graveyards and one of its busiest hospitals, Young Brothers' headquarters looks more like an abandoned warehouse than a leading distributor of human skeletons. The rusted front gate appears to have been padlocked and forgotten a decade ago. Above the entrance, the company sign is a tableau of peeling paint.

It wasn't always this way. The building was bustling with activity in 2001, according to former Kolkata Health Department chief Javed Ahmed Khan. At the time, neighbors complained that the Young Brothers offices stank of death. Huge piles of bones lay drying on the roof. When the police refused to file a case, Khan raided the building with a posse of bamboo-wielding heavies.

"There were two rooms full of human skeletons," Khan recalls. It took five trucks to haul them away. He also seized thousands of documents, including invoices to companies all around the world. "They were sending shipments to Thailand, Brazil, Europe, and the United States," he says.

Sixteen years after the export ban, it was as if the law had never taken effect. "We used to fill orders all over the world," says a clerk employed by Young Brothers between 1999 and 2001, who requested anonymity. "We used to buy bones from Mukti Biswas. I saw more than 5,000 dead bodies." There were other suppliers, too, and factories up and down the length of West Bengal. The company took in roughly $15,000 a month. Khan's raid prompted the police to arrest Young Brothers' owner, Vinesh Aron. He spent two nights in jail before being released.

Today, there are no bones on the roof. I've been poking around the area for an hour or so, interviewing neighbors, when a white van pulls up to the building. A man dressed in a pink-checkered shirt steps out. He walks briskly to a side door and knocks: Vinesh Aron. Aron sees me snapping photos and knocks more forcefully, but the assistant inside is having trouble with the lock. As I try to formulate a question, my translator shoves a microphone in his face and asks whether he's still shipping skeletons to the West. Looking flustered, Aron blurts, "We won that case!" The entrance cracks open and he slips in before the door slams in my face.

In a subsequent phone conversation, Aron says he now sells medical models and charts, but no bones. However, a vendor of surgical instrument supplies who claims to be his brother-in-law says Young Brothers is the only bone distributor in the country. "My brother-in-law is the only man who still does this in India. He is the only one with guts," he says. Then he offers to dig up a skeleton for me for 1,000 rupees ($25).

The most recent Young Brothers catalog (2006-2007) takes care to inform customers that it abides by the law. It lists a wide assortment of bones at wholesale prices, noting that they're "for sale in India only." Indian skeletons are somehow making it out of the country anyway.

In Canada, Osta International sells human bones throughout the US and Europe. The 40-year-old company offers to fill orders immediately.

"About half of our business is in the States," says Christian Ruediger, who runs the business with his father, Hans.

Ruediger admits that Osta stocks bones from India, presumably smuggled out of the country in violation of the export law. Until a few years ago, he got them from a distributor in Paris, but that source dried up in 2001 — around the time Javed Khan raided Young Brothers. Since then, he has bought his stock from a middleman in Singapore. He declines to provide the name. "We want to keep a low profile," he says.

Of some 30 institutions I contacted in the course of researching this article, the handful that admitted to buying bones in the past few years declined to reveal their sources or speak on record. Osta's name came up twice. "I bought a complete skeleton and a dissected human demonstration skull from Osta," a professor at a prestigious Virginia college says. "Both were excellent."

Another Osta customer is a firm called Dentsply Rinn, which offers a plastic model head containing a real skull, used in training dentists.

"It's very difficult to procure human bones," marketing manager Kimberly Brown says. "Our requirements stipulate that the skulls must be of a certain size and grade and without certain anatomical defects. But we have no requirement for their origin."

Indian authorities express a similar lack of concern. Although the international bone trade violates the national export law and local statutes against grave desecration, officials look the other way."This is not a new thing," says Rajeev Kumar, West Bengal's deputy inspector general of police. "There's no evidence that they were killing people." The police took an interest in Biswas only because the bodies of a few important people went missing. "We are trying to implement the law based on the stress society places on it," he adds.

"Society does not see this as a very serious thing."

The need to study human bones in medicine is well established. The need to obtain the informed consent of people whose bones are studied is not. The reemergence of India's bone trade reflects the tension between these requirements. Someday doctors may develop a supply chain based on voluntary donation. Meanwhile, the bone factories of Kolkata are open for business.


Guns In Bed

CATEGORY: Shotguns, Home Invasion, Bedside Readiness

DIVISION: Products

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What Evil Twins are Good For

CATEGORY: Twins, Evil, Crime

DIVISION: Modern Evil

EDITORIAL: Most of us invented friends or imaginary beings when we were children, but inventing an evil twin is just plain smart. What better way to deflect blame and responsibility than by pointing a finger at your sibling rival. Applied with psychiatric supervision, this could also have extraordinary therapeutic benefits.

Evil Twin Accused of Crafty Con

by Kate Eckman

CAPE CORAL: A Cape Coral man has been accused of stealing hundreds of thousands of dollars. But when police started putting the pieces of the crime together, he claimed that they had it all wrong - it was his twin brother who committed the crimes.

Investigators told NBC2 the only difference between 57-year-old Anthony Calavano and Joseph Calavano, the man Anthony says is his twin brother, is one digit on their social security numbers.

But when detectives dug deeper, they discovered Joseph's number actually belongs to a New Jersey woman.

It seems Anthony and Joseph have more than a lot in common than a simple social security number. Officials with the Lee County Sheriff's Office Forensics Department checked the fingerprints of both men. They told NBC2 they're actually the same person.

Friday night, Anthony was out of jail on bond and we were able to speak to him over the phone.

When NBC2's Kate Eckman asked him if he was simply posing as two different people, he said that his attorney handles matters like that.

A few hours later, he called back to the NBC2 newsroom and said he would do the interview on the condition that we paid him for it.

We were able to ask him if we could talk to his so-called twin brother Joseph. He said that we could not and that he did not know his brother's phone number.

Police reports say Anthony Calavano turned himself in to police on grand theft charges.

Officers are accusing him of trying to take advantage of a divorce by taking out a loan in his ex-wife Ermalinda's name.

The arrest report says back in June, Ermalinda Calavano told police a home equity loan for nearly $100,000 had been taken out against her home without her knowledge.

Ermalinda told police she never signed the documents for the loan. Calavano later admitted he was the one who signed her name and said he did it right in front of a bank representative.

That Wachovia Bank loan coordinator told Cape police she did in fact notarize Ermalinda's signature without speaking to her or positively identifying her.

Wachovia Bank fraud investigators provided police with records from Anthony's account. About $21,000 had been drawn from the loan and placed into an account that only Anthony holds.

But Anthony says the bank made a mistake and the woman who processed the loan has been fired.

Aside from grand theft, Calavano could also face several other charges including forgery, criminal use of personal identification information, and applying for and obtaining a Florida driver's license number under the name of Joseph Calavano.


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Out With the Old Evil, and In With the New

CATEGORY: Evil Forces, Cleansing, Demon Goats

DIVISION: Products and Services

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Granville Evil Gone

Richard Charan

The people of troubled Granville, Cedros, have heard no evil and seen no evil since the cleansing of their village by holymen last Friday.

Pundit Prabhoodeo Maharaj, who was one of the priests to perform the rituals, said yesterday that no one had come to him since then to complain about a supernatural event.

"The area is calm. Everybody slept well," he said yesterday.

There has been fear and unease in the village since the suicide death of Dohmatie Seebran, a young mother who set herself on fire two weeks ago. Before dying, she told of hearing voices in her head, telling her to "do it".

Dohmatie's life was outwardly perfect said neighbours and her husband, Mookesh Seebran.

Since her death, three women have told their pastors and pundit of being visited by an evil force, which told them to kill or die.

The thing, some believe, dwells in the body of a goat seen emerging from the forest at night.

The "demon" has targeted only women, villagers say, and many are fearful to walk the roads after nightfall.

Nine years ago, some in the village said they were visited by something they linked to the suicide death of cousins in love, and the suicides within days of three other teenagers from the village.

Last Friday, villagers and their religious leaders walked through the village with incense, flambeaux and deyas. They sang Hindu religious songs and read from the Bible.

It was a ritual, Maharaj said, to chase the evil out of the village.

Residents met that night at the Granville Community Centre for an interfaith service involving the Roman Catholic, Open Bible, Pentecostal, and Church of God churches.

Residents also prayed for the family of brothers Nigel and Neil Siberan, who disappeared from their Granville home back on November 17, 2005.

Their bodies were found buried in a backyard grave 56 days later. They were chopped to death. The murders are unsolved.


Reincarnation Banned in China

CATEGORY: Reincarnation, Government Censorship

DIVISION: Education, Products

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Reincarnation Banned

By Matthew Philips


Aug. 20-27, 2007 issue - In one of history's more absurd acts of totalitarianism, China has banned Buddhist monks in Tibet from reincarnating without government permission.

According to a statement issued by the State Administration for Religious Affairs, the law, which goes into effect next month and strictly stipulates the procedures by which one is to reincarnate, is "an important move to institutionalize management of reincarnation."

But beyond the irony lies China's true motive: to cut off the influence of the Dalai Lama, Tibet's exiled spiritual and political leader, and to quell the region's Buddhist religious establishment more than 50 years after China invaded the small Himalayan country. By barring any Buddhist monk living outside China from seeking reincarnation, the law effectively gives Chinese authorities the power to choose the next Dalai Lama, whose soul, by tradition, is reborn as a new human to continue the work of relieving suffering.

At 72, the Dalai Lama, who has lived in India since 1959, is beginning to plan his succession, saying that he refuses to be reborn in Tibet so long as it's under Chinese control. Assuming he's able to master the feat of controlling his rebirth, as Dalai Lamas supposedly have for the last 600 years, the situation is shaping up in which there could be two Dalai Lamas: one picked by the Chinese government, the other by Buddhist monks. "It will be a very hot issue," says Paul Harrison, a Buddhism scholar at Stanford. "The Dalai Lama has been the prime symbol of unity and national identity in Tibet, and so it's quite likely the battle for his incarnation will be a lot more important than the others."

So where in the world will the next Dalai Lama be born?

Harrison and other Buddhism scholars agree that it will likely be from within the 130,000 Tibetan exiles spread throughout India, Europe and North America. With an estimated 8,000 Tibetans living in the United States, could the next Dalai Lama be American-born? "You'll have to ask him," says Harrison. If so, he'll likely be welcomed into a culture that has increasingly embraced reincarnation over the years. According to a 2005 Gallup poll, 20 percent of all U.S. adults believe in reincarnation. Recent surveys by the Barna Group, a Christian research nonprofit, have found that a quarter of U.S. Christians, including 10 percent of all born-again Christians, embrace it as their favored end-of-life view. A non-Tibetan Dalai Lama, experts say, is probably out of the question.

Shoeless Rich Avoid Jealous Sorcerers

CATEGORY: Jealous Sorcerers, Invisible Spirits

DIVISION: Products

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Uganda: Evil Spirits Frustrate Growth in Nakasongola

New Vision (Kampala)

Frederick Kiwanuka

Nabiswera health centre which had been closed. Left, Police arrests a man suspected of possessing mayembe, displayed in the basin.

The print media recently ran an article that local leaders in Nabiswera sub-county, Nakasongola District, had hired an exorcist to cleanse a Government health unit which had been haunted by mayembe (evil spirits). Some readers may have laughed their heads off, thinking it was mere circus.

But, to the people of Nakasongola including the local leaders, the phenomenon of sorcery and witchcraft is a real problem that goes beyond mere superstition one that is likely to hinder development of the infant district.

If the local leaders had not hired an exorcist to cleanse Nabiswera health centre, it would still be closed, as the entire medical staff had fled and vowed never to return. The nurses alleged that invisible spirits had raped them.

The belief in witchcraft in Nakasongola is very strong. Right from the ordinary peasant in Lwampanga on the shores of Lake Kyoga, to the district chairman, everybody in Nakasongola believes that witchcraft is a threat.

When James Wandera, the district chairman, won the local council elections last year, he did not enter his office until after the floor had been dug up and resealed with new tiles. The chairman has also refused to use his official Isuzu four-wheel drive, which had been used by his predecessor. Insiders say all these are 'precautionary measures'

When the area Member of Parliament, Peter Nyombi, got involved in a car accident during the politicking period of 2005/2006, his aides were quick to point an accusing finger at his rivals.

After narrowly surviving the accident, some of Nyombi's close supporters advised him to stand down for the 'sake of his life'.

But Nyombi, who is a born-again Christian, insisted on remaining in the race and went ahead to win the parliamentary seat.

Some politicians in the area are also said to undergo several open-air rituals every time they win elections, allegedly to get blessings from the 'gods of Lake Kyoga.'

The widespread belief in witchcraft in the potentially rich Nakasongola district, has had a negative impact on the socio-economic development of the area, by creating unnecessary fear among the population.

According to Wasswa Sennyonga, an LC2 councillor in Nabiswera, several local 'tycoons' have deliberately refused to construct permanent houses, or even wear shoes, for fear of appearing to be wealthy and fall victim of jealous sorcerers.

Charles Awiyo, the District Police Commander, says people fear mayembe because they are believed to be omni-present. "People here believe that there is witchcraft in every house," Awiyo says.

He says a simple quarrel at a local bar may escalate into a show of mayembe 'terrorism' with each party trying to show the other that they can use special powers to unleash terror.

"And when they reach home, each one puts their threat into practice," says Awiyo.

Where Do Mayembe Come From?

The Ssaabaruuli Isabarongo Mwogezi Butamanya, the elected cultural head of the Baruli clans, quickly points an accusing finger at the Buganda as the source of mayembe which are terrorising the area.

"In the kiruuli culture, we did not have mayembe," Mwogezi says, adding that "All the mayembe here speak Luganda and none speaks Luluuli."

Mwogezi says some people in Nakasongola buy mayembe for protection against enemies, while others buy them to become rich. He says mayembe can be used to steal money from a rich neighbour.

Whatever the justifications, Nakasongola locals have realised more sacrifices than benefits from their strong beliefs in witchcraft.

In addition to affecting government institutions like schools and health centres, several residents have had their homes demolished over accusations of killing neighbours using mayembe, leading to unnecessary suffering of children and women.

Wandera says his advice to the residents to ignore the belief in mayembe has fallen on deaf ears.

"We are trying to change people's attitude, because believing in witchcraft during this modern era is backward," Wandera says.

Francis Batinti, the Resident District Commissioner, simply laughs it off. "It is funny that people are running away from invisible things, something has to be done," Batinti says.

Although the Penal Code Act has provisions for punishing people who possess witchcraft, Awiyo says they have never taken any culprit to court. "Because it is very difficult to prove," Awiyo says.

On their part, Kasana-Luweero Catholic Diocese have launched an evangelisation mission, especially whenever a new case comes up. But each time they have failed to drive away the spirits, forcing the local people to have resort to exorcists.

Before Nabiswera local leaders resorted to hiring an exorcist the district administration had on two occasions sent their two teams of born-again Christians to send away the 'evil spirits' through prayers, but each time they would fail.


Death Bonds = Death Bets?

CATEGORY: Death Bonds

DIVISION: Products, Investments

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Profiting From Mortality - The Death Bond

Business Week

Death bonds may be the most macabre investment scheme ever devised by Wall Street.

In May, as the subprime mortgage market was cracking, many of the biggest players in finance gathered at a conference in New York to talk about the next exotic investment coming down the pike: death bonds. When the event was held two years ago, just 250 people showed up. This time, nearly 600 descended on the Sheraton Hotel & Towers for the three-day confab, including delegations from Bear Stearns (BSC ), Deutsche Bank (DB ), Lehman Brothers (LEH ), Merrill Lynch (MER ), UBS (UBS ), Wachovia (WB ), Wells Fargo (WFC ), and other big firms.

They flocked to seminars with titles such as "Legislative Review," milled about the exhibition hall picking up the usual conference swag, and buzzed at luncheons and a Carnegie Hall gala about the big push into the market being made by Cantor Fitzgerald, a major bond-trading shop. With all the happy banter, you wouldn't have known they were there to learn about new and imaginative ways to profit from people dying.

Death bond is shorthand for a gentler term the industry prefers: life settlement-backed security. Whatever the name, it's as macabre an investing concept as Wall Street has ever cooked up. Some 90 million Americans own life insurance, but many of them find the premiums too expensive; others would simply prefer to cash in early. "Life settlements" are arrangements that offer people the chance to sell their policies to investors, who keep paying the premiums until the sellers die and then collect the payout. For the investors it's a ghoulish actuarial gamble: The quicker the death, the more profit is reaped. Most of the transactions are done by small local firms called life settlement providers, which in the past have typically sold the policies to hedge funds. Now, Wall Street sees huge profits in buying policies, throwing them into a pool, dividing the pool into bonds, and selling the bonds to pension funds, college endowments, and other professional investors. If the market develops as Wall Street expects, ordinary mutual funds will soon be able to get in on the action, too.

BUT THE INVESTMENT BANKS are wading into murky waters. The life settlements industry increasingly finds itself in the grip of dubious characters devising audacious and in some cases illegal schemes to make money. Many are targeting elderly people with deceptive sales pitches—so many that the National Association of Securities Dealers has issued a warning about abusive practices. Others are promising investors unrealistic returns or misleading them about the risks. Some are doing both.

That didn't discourage the high-powered guests at the New York conference, though. As they tossed back cocktails and dined on pan-seared filet mignon, they enthused about the market's possibilities. "Wall Street firms are here because they know this is an asset class that isn't going away," says David C. Dorr, president and CEO of Life-Exchange Inc. (LFXG ), an electronic platform for trading life settlements. "There's big potential."

The truth is, at this early stage, there's no way of knowing how popular death bonds might become. Wall Street's innovation machine has turned out both huge hits and big flops over the years. But the growth of the underlying market for life settlements has been torrid so far. In 2005 about $10 billion worth were transacted, according to Sanford C. Bernstein & Co. (AB ), up from virtually nothing in 2001.

Industry analysts say this number rose to $15 billion in 2006, and could double this year, to $30 billion. Over the next few decades, as the ranks of retirees swell, Bernstein predicts that the face value of life settlement deals will top $160 billion a year in today's dollars. Death bonds will never approach the size of the mortgage market, which saw $1.9 trillion of securities issued last year. But if Wall Street achieves its goal of turning most of the life settlements created each year into death bonds, the market could rival the size of today's junk-bond market, where issuance totaled $128 billion in 2006, up from $56 billion in 1996, according to market watcher Dealogic.

Investment banks have already drawn up their sales pitches to well-heeled institutional customers. Firms say death bonds should return around 8% a year, right between the expected returns of stocks and Treasury bonds. Moreover, they're "uncorrelated assets," meaning their performance isn't tied to what's happening in other markets. After all, death rates don't rise or fall based on what's happening to commodities, say. Uncorrelated assets like these are highly prized in an increasingly connected global financial system.

It all sounds great, except that many of the life settlements that Wall Street firms are buying fall into categories ranging from sketchy to toxic. "They are creating a very risky product," says Janet Tavakoli, a Chicago financial consultant who specializes in advising clients on asset-backed investments. "They may be planning to sell them to sophisticated investors, but they could be roping in people who don't appreciate the risk."

Many life settlement providers, for example, are trying to lure people who don't even hold insurance. In this tail-wagging-the-dog scenario, speculators take out policies on the individuals' behalf, pay them something up front, cover the premiums, and then wait for the people to die so they can collect. At the most outlandish extreme, one outfit devised a plan involving the population of the Federation of St. Kitts and Nevis in the Caribbean.

Investors, meanwhile, have been burned by operators who have misrepresented the profit potential on deals. Two men now awaiting trial in California hatched an allegedly fraudulent scheme aimed at the entire congregation of a black church in South Central Los Angeles. They promised investors 25% annual returns because African Americans die earlier than other racial groups—an ugly pitch that prosecutors say overstated the upside potential.

Even some of the biggest life settlement firms operate under a cloud. Philadelphia's Coventry First, for example, faces civil charges from the New York Attorney General's office and is in danger of being barred from doing business in Florida. It denies any wrongdoing.

The eight-year-old industry certainly has an ignominious history. It grew from the shards of the so-called viaticals business, which imploded in the late 1990s amid allegations of fraudulent dealings with AIDS patients and other terminally ill people. The word viatical comes from viaticum, a religious term for the communion given to a person near death. As AIDS spread during the 1980s, patients turned to the viatical settlements market to unlock insurance money to pay for care. But advances in medicine in the 1990s extended patients' lives, making viaticals less profitable for the buyers. At the same time, the industry was rife with abusive sales practices that drew the attention of prosecutors. By 1999, business had all but dried up.

Surprisingly little has changed in the latest iteration. Only 26 states require professional licensing for life settlement brokers; elsewhere, anyone can hang a shingle. The market is especially popular among former stockbrokers, mortgage brokers, insurance agents, and lawyers. But all sorts of people from small-time movie producers to dentists are setting up shop.

There's nothing inherently wrong with life settlements. In fact, for people who need quick cash or want to supplement their retirement nest eggs, the market can be a boon. Without it, a person looking to unload a policy would have only one choice: to sell it back to the insurer for the so-called cash surrender value, a fraction of the face value. "No one is forcing anyone to sell insurance policies," says Meir Eliav, president of Legacy Benefits Corp., a New York life settlements provider that was involved in one of the first death bond deals in the U.S., a $70 million offering in 2004. "This is a terrific option for the consumer."

Wall Street's intense interest says much about the world of high—and low—finance in 2007. In earlier eras, big firms' success or failure rested mainly on their ability to turn long-term client relationships into full-service operations—advising corporate clients on potential acquisitions, managing investments, and arranging financing. But Wall Street has been overtaken by securities trading and the endless creation of financial products, such as asset-backed bonds, collateralized debt obligations, credit default swaps, and other exotica.

Cast in that light, Wall Street's move into death bonds seems almost inevitable. Goldman Sachs (GS ) and the other firms consider these instruments the next stage in a trend that started with mortgage-backed securities in the 1970s and has since expanded to include everything from credit-card receivables to intellectual property. The term of art is "securitization," and it has become a multitrillion-dollar business. The mechanics are straightforward: Assets are pooled together and then sold off in the form of bonds or pieces of bonds. By collecting many different assets, the risk is dispersed: Even if a few don't pay off, the rest will. At least that's the theory.

ALREADY THERE'S a bustling market in Germany and London for unrated death bonds—that is, ones that aren't graded by big ratings agencies such as Moody's Investors Service (MCO ) or Standard & Poor's (which, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP )). So far there have been only two small rated deals in the U.S. But given how aggressively the banks are stockpiling life settlements, most market watchers expect big, rated deals to become commonplace soon, at which point mutual funds can dive in. "The product just lends itself to securitizations, like what has been done with mortgage-backed securities," says Philippe Hatstadt, who heads the new "longevity derivatives" group at Bear Stearns & Co (BSC ). Cantor Fitzgerald, one of Wall Street's savviest bond-trading shops, is rolling out an electronic trading platform for life settlements and, ultimately, death bonds. The LexNet platform has been in the works for more than a year and is a major priority inside Cantor, say insiders.

But the push into increasingly complicated securitizations carries with it ever greater risk. That's what Wall Street is dealing with now as bonds backed by pools of subprime mortgages blow up left and right. A surge in defaults on these riskiest of loans is battering the hedge funds that invested—and the banks that arranged, packaged, and sold them. In June, two Bear Stearns hedge funds that bet on bonds backed by subprime loans collapsed, sparking panic on Wall Street about the health of other risky investments. Tavakoli says the same kinds of missteps are bound to happen with death bonds. But Wall Street is good at justifying its moves into new lines of business, however iffy they might seem, notes Kenneth C. Froewiss, a professor of finance at New York University's Stern School of Business and a former JPMorgan Chase & Co. (JPM ) investment banker: "At the end of the day, what Wall Street does best is figuring out what investors might want and structuring products to meet those needs." And its own needs.

That's not to say it isn't aware of appearances. Wall Street is doing its best both to polish the life settlement industry's image and to downplay its own direct involvement. The New York conference was put on by the Life Insurance Settlement Assn. (LISA), an organization of market players that began as the Viatical Association of America in 1994, changed its name to the Viatical & Life Settlement Assn. in 2000, and then dropped the "viatical" altogether three years ago. In an attempt to put even more distance between Wall Street and the old viatical crowd, six investment houses, including Bear Stearns, Credit Suisse (CS ), Goldman Sachs (GS ), and UBS, in March formed a trade group called the Institutional Life Markets Assn. to lobby for "best practices" and "appropriate regulation."

Until some degree of legitimacy is in place, firms will keep as low a profile as possible. Goldman Sachs, for example, came close last year to acquiring San Diego's Life Settlement Solutions Inc., a large provider, but backed out at the last minute, according to people familiar with the potential deal. Instead, Goldman, which declined to comment for this story, is quietly building up its own subsidiary under the nondescript name Eastport Capital. That unit sent four representatives to the LISA conference.

It's no wonder that Wall Street is simultaneously attracted and cautious. The alchemy going on in the finance labs is real, but the market for life settlements is deeply troubled. There's a persistent problem with brokers offering lowball prices and failing to disclose transaction costs. The marketing to investors has often been suspect, too. In late 2005, for instance, the big accounting firm KPMG sent a cease-and-desist notice to Keydata Investment Services Ltd., a London firm that was using KPMG's name in its marketing material for unrated death bonds without permission. A Keydata official didn't return phone calls seeking comment. A KPMG spokesman says: "We do not endorse or recommend these products."

IMPROPER MARKETING is just one of the things that got two California men into trouble. Next March, Curtis D. Somoza and Robert A. Coberly are scheduled to go on trial in federal court in Los Angeles on charges that they bilked dozens of investors out of tens of millions of dollars in a scheme involving an African American church group in Los Angeles called the Personal Involvement Center. The men, whose lawyers declined to comment, raised $69 million for an investment trust called Persistence Capital, which arranged to buy policies from Transamerica Corp. on the lives of some 2,000 members of the inner-city church. The deal was structured so that Persistence would pay for the premiums, while the $275,000 death benefit on each policy would be split three ways: $15,000 to the deceased person's family to cover burial costs, $20,000 to the church group, and the remaining $240,000 to the trust. The trust's haul would go toward paying the premiums on the remaining policies and providing payouts to investors.

Somoza and Coberly pitched the deal to the Reverend J. Benjamin Hardwick as an opportunity for the 75-year-old pastor to get a modest death benefit for his mostly poor members and raise funds for the group's charitable works. Somoza and Co-berly sold it to investors as a way to score a high annual return of 25% because the church group's members "were predominantly African Americans and had a higher mortality rate than the average population," according to the indictment. Prosecutors say the pitch reflected inflated return assumptions. Hardwick didn't return several phone calls seeking comment.

Soon after the deal was set up, say prosecutors, Coberly and Somoza began looting the trust to buy mansions and sports cars. In September, 2005, a year after Persistence bought the policies from Transamerica, it was forced into bankruptcy by investors demanding their money back. Trying to salvage the scheme, Coberly and Somoza shopped the policies to other investors but could find no buyers. They were arrested in May, 2006, and charged with 27 counts of securities and wire fraud.

Coventry First has also been accused of wrongdoing. Last October Eliot Spitzer, in one of his final acts as New York's attorney general, charged the firm with cheating elderly insurance holders. In a civil suit in New York State Court, the now-governor accused Coventry, which buys life settlements and resells them, of making "dozens" of secret payments to brokers as a reward for not seeking competing bids. (The investigation is now overseen by Attorney General Andrew Cuomo.) Coventry CEO Alan Buerger says the lawsuit was based on "a handful of out-of-context e-mails."

True or not, the allegations against Coventry sent a shock wave through the life settlement business. Most damagingly, they torpedoed a planned $300 million death bond offering from a partnership formed by Coventry and Ritchie Capital, a hedge fund. The deal, which was to be underwritten by Lehman Brothers Inc (LEH )., would have been backed by a pool of life insurance policies with a face value of $1.16 billion, by far the largest U.S. death bond offering to date.

What's alarming is how far the deal had progressed before blowing up. Investors were cued up and ready to buy. On Oct. 10, 2006, Moody's (MCO ) even tagged the senior notes, which had a face value of $166 million, with a rating of A3, an investment-grade status that would have allowed ordinary mutual funds to pile in. Then the Coventry suit was filed, and Moody's quickly withdrew its rating, citing the "uncertainty surrounding the transaction." Michael N. Adler, a Moody's spokesman, says the firm wasn't aware Coventry was under investigation when it issued the rating. The 10-page report that accompanied the rating is no longer available to the public. In the report, obtained by BusinessWeek, Moody's said it believed that Coventry's "due diligence was adequate for the rating being requested." Jay Eisbruck, a Moody's managing director, stresses that "this is an asset class that we are very careful about."

What especially worries regulators are so-called stranger- initiated deals, in which an investor persuades people to take an expensive policy and lends them money for the premium. In the boldest example yet, an investor group pitched a bank on a deal involving all 45,000 residents of St. Kitts and Nevis. The promoters claimed the islands' government was on board. But the deal got a cool reception from Wall Street bankers, who all stress that they perform ample due diligence before buying policies. A government finance official said he had never heard of such a deal.

Yet hedge funds and other finance firms have been diving into other stranger-initiated deals in the past two years, wooing seniors into taking out policies by offering cruises and other gifts. Industry sources estimate that $10 billion to $20 billion in such policies have been created since 2004. Some state insurance commissioners have joined with insurers in calling for a crackdown.

Amazingly, such problems have merely delayed the emergence of death bonds, not derailed it. G. Andrew Karolyi, a finance professor at Ohio State University's Fischer College of Business who specializes in international markets, says Wall Street's interest is predictable given the "demographic bubble" of aging baby boomers, many of whom will be looking to cash in insurance policies. "For investment banks," he says, "all of this sounds like an opportunity to make money." Tavakoli, the securitization consultant, is more blunt. The idea of death bonds, she says, "creeps me out."

How Death Bonds Work

CATEGORY: Death Bonds, How-To

DIVISION: Products, Investments

NOTE: This instructional brief is meant as a quick overview on how Death Bonds work. For more details, consult a professional broker [coming soon to Modern Evil].

Profiting from Mortality

Death bonds may be the most macabre scheme ever. Investors buy up life insurance policies, securitize them, and collect when the insured persons die.

The Seller

A person, typically 70 or older, who wants to cash out of a life insurance policy hires a "life settlement" broker to find prospective buyers. The buyers keep paying the premiums until the seller dies, and then they collect. The up-front payout to the seller varies widely, from 20% of the death benefit to 40%.

The Broker

A person paid to link buyers and sellers, this player typically seeks three bids from specialty finance firms called life settlement providers, which are often financed by hedge funds and investment banks. Commissions, paid by the seller, usually range from 5% to 6%.

The Provider

The life settlement provider resells the insurance policy to a hedge fund or investment bank, which warehouses it in order to build a big pool of policies.

The Investment Bank/Hedge Fund

After a bank or hedge fund collects a sufficient number of policies, typically 200, it turns them into asset-backed securities called death bonds to sell to investors. The pitch: Death bonds will produce steady returns (around 8%) and aren't correlated with stocks, bonds, commodities, or other investments.

The Investor

Hedge funds and other big investors are already buying up death bonds in Europe and expect a big bond issue in the U.S. soon. Institutional investors are especially attracted to uncorrelated assets, which make their portfolios less volatile.

The Bond Rater

Big debt-rating agencies such as Moody's Investors Service and Fitch Ratings are soon expected to start issuing ratings on death bonds in the U.S., opening the market to other big investors including mutual funds. Moody's has already rated at least one death bond issue, although it subsequently pulled the rating when the provider was charged with fraud.


Wanted: Dead Or Alive

CATEGORY: Death, Technical Definitions

DIVISION: Modern Evil, Products

EDITORIAL: Technical definitions of death fail at the times when they are needed the most, usually in life-and-death situations.

So to put to rest the debate for yourself and your loved ones, the Modern Evil Online Will and Testament Kit [to be introduced later this year] will also include a customizable AND legal definition of your own death. Your end should be of your own choosing.

Because when you're incapable of living, you may also be incapable of dying.

Should You Define Your Own Death?

By Tom Heneghan

17 Jul 2007 23:04:59 GMT

WASHINGTON, July 18 (Reuters) - Robert Veatch weighs his words carefully when he talks about how people pass away. Most simply die. Some "become dead". Others are "made dead".

Some end-of-life cases are so unclear, he thinks, that people should be able to choose in advance the definition of death they want to be used to declare them deceased.

"Most ordinary people, including most physicians, assume whether you're dead or alive is a science question," Veatch, a Georgetown University medical ethics professor who has lectured about death and dying for over three decades, told Reuters.

"In my view, it's a philosophical and religious issue and different people have different views on the matter," he said at a bioethics seminar at Georgetown's Kennedy School of Ethics.

Thanks to medical progress, terminally ill patients or victims of severe accidents can be kept on life support far beyond the point where they would have died naturally.

Veatch asked if being permanently unconscious and dependent on feeding and hydration tubes is still really life. If not, then people taken off that support are not killed, he argued, but are "made dead" or they "become dead".

The traditional view is that death occurs when the heart and lungs stop. Since the 1970s, Western countries have defined it as the irreversible loss of the entire brain's functions.

But the brain stem can keep basic functions going -- such as breathing -- even in a permanent vegetative or comatose state.

So since 1973 Veatch has been advocating a third definition saying that death sets in when the higher brain functions -- the thinking and feeling that make us human -- are lost.

This means death comes when consciousness is permanently lost, he said: "If you've got the substratum in your brain for consciousness, you're alive. If that's gone, you're dead."

Veatch suggests the law set a default definition, most likely whole brain death, and let individuals opt out and sign a statement saying they want to be declared deceased either by cardio-respiratory death or higher brain death.

Only two places on Earth allow anything near this. The U.S. state of New Jersey lets orthodox Jews opt out of the whole brain-death idea and use cardio-respiratory death because they traditionally see breath as the key to life.

Japan uses the heart and lung criteria as a default, but lets people opt for whole brain death so they can donate organs.

"It's not an accident that we did the first heart transplant in 1968 and in 1970, we began adopting laws that change the definition of death," Veatch said. "As soon as we figured out a way to do heart transplants, we had to figure out a way to get somebody dead without their heart stopping."


Stock in Niche Defense Firms Soars in Wartime

CATEGORY: War Profiteering

DIVISION: Investments

COMMENTARY: If there's anyone who should come out ahead in the current wars, it's the people that started them. They're the ones that took the initiative, had a vision, and sold everyone on the new venture - so of course, they should reap the rewards.

We encourage you to contact your broker and get in on the action while there's still some war left.

Armaments And Investments

By Renae Merle

Washington Post Staff Writer

Sunday, July 15, 2007; F01

Bullets, trucks and armor -- the meat and potatoes of the defense industry -- are back in fashion.

After years of holding second rank to expensive, futuristic programs -- from $300 million fighter jets to robots -- the essentials have been pushed to the forefront by the wars in Iraq and Afghanistan. And that has proved good news for the stocks of companies that replenish the weapons, trucks and helicopters that see frontline action. They are among the best performers this year, analysts say.

The Iraq war may be politically unpopular, but it has been a boon for the defense industry. Last year, the sector soared 27.7 percent, while the Standard & Poor's 500-stock index rose 13.6 percent. So far this year, the industry has gained 26.7 percent, compared with the S&P's 9.5 percent increase. Since 2001, defense stocks that make up the S&P Aerospace & Defense Select Industry Index have climbed 181.7 percent; the broader market is up 17.6 percent.

But it's the niche companies, such as the makers of armored vehicles, that are the top individual gainers this year, according to the Spade Defense Index, which tracks the sector.

"Clearly anything that is still related to the war in Iraq and Afghanistan is the hottest market right now," said Byron Callan, an independent industry analyst.

Among the hottest products is the Marine Corps' newest mine-resistant vehicle. The program for the vehicles -- which cost about $1 million each -- has ballooned over the past few months to a potential $20 billion from $8 billion, lifting prospects for the vehicles' manufacturers. The military is seeking the vehicles because it thinks they can better protect troops from roadside bombs, the biggest threat to service members in Iraq.

The makers of these vehicles, including Force Protection and Oshkosh Truck, recently emerged as winners in the House version of the 2008 defense authorization bill. The administration had requested $400 million to help fund production. The House approved $4 billion. Force Protection stock is up 31percent this year, and Oshkosh has gained 34 percent.

A highly critical report from the Pentagon inspector general didn't hurt Force Protection's stock. Last week, the inspector general's office said Force Protection was slow to deliver on contracts, but the company's stock finished up Thursday after release of the report.

The larger defense industry isn't exactly suffering from the attention given to the niche players. The big weapons makers have continued to soak up huge Pentagon spending and have expanded their international business. Military spending is on target to reach $624.6 billion in fiscal 2008, including more than $100 billion in war supplemental outlays, according to a report by the Center for Strategic and Budgetary

Assessments on June 7. At those levels, the flow of military funds would be the highest in real terms since fiscal 1946, the report said.

Among big defense contractors, Lockheed Martin stock has gained 6.7 percent this year, General Dynamics has climbed 9 percent and Raytheon is up 4 percent.

Analysts caution that the huge outlays that have propped up the big defense companies may not continue. "It just seems there is a ceiling we're going to hit here. It is not like DOD is behaving like it's blue skies forever," said Callan, the independent industry analyst.

In fact, the House authorization bill shaved more than $800 million from Boeing's Future Combat Systems. That huge Army modernization project includes new tanks and equipment that will not be ready for several years.

Investing in defense companies is different from buying into most other industries. For starters, a company's income depends largely on the Pentagon and Congress. In choosing stocks, the political and military winds often matter as much as a company's operations. A weapon in favor one year could be canceled the next, requiring investors to stay sharply attuned to the companies' lobbying efforts and political clout. A company's bottom line can also be affected by government oversight. Congress has recently stepped up its criticism of firms for late and over-budget programs.

"The defense industry has done very, very well without much oversight from Congress," said David Strauss, U.S. aerospace and defense analyst for UBS Investment Research.

He noted that in the past, companies were not forced to absorb some of the expenses when a program exceeded its cost targets. "Now you've got Congress trying to put a closer thumb on that," Strauss said.

In a May industry survey, Standard & Poor's said: "The military weapons-buying business operates in a highly regulated environment." Put another way, the report added, the budget process by which contractors get money is "arduous and unpredictable."

Investors also find themselves somewhat in the dark about what exactly they're getting for their money. Often a good chunk of larger defense companies' operations are classified, meaning investors can't get a full picture of what's generating a firm's revenue.

"Even for people on Wall Street, it's very, very hard for us to know how much individual companies are benefiting from classified areas," said Strauss.

Intelligence spending is on the rise, analysts say. One hot area is information technology for gathering intelligence and identifying enemies, said Eric Hugel, an industry analyst for Stephens Inc. "I mean, there is a lot money going into these things, we just don't know how much, but theoretically it's a lot," Hugel said.

The excitement about this sector was evident last year when Northrop Grumman bought Columbia-based Essex. Northrop sought Essex because it specializes in classified technology used by the National Security Agency and other agencies. Northrop paid about $580 million for Essex, whose technology processes signals, images and information the agencies collect. Essex's projected earnings of $250 million to $300 million this year made Northrop's purchase among the priciest for a federal information technology firm in recent memory, according to Jefferies Quarterdeck, a mergers-and-acquisition investment-banking firm that served as Essex's adviser.

Information technology companies operating in the more prosaic arena of Pentagon computer upgrading and database integration have been attracting less funding in recent years. These firms, which flourished after the Sept. 11, 2001, terrorist attacks, are now losing out to sexier IT companies involved in intelligence. Organic revenue growth in the sector has declined to about 5 percent from an average of 20 percent in 2004, said Bill Loomis, a government-technology analyst for Stifel Nicolaus. The information technology company CACI International, for example, has lowered its earnings expectations and seen its stock slump in recent months. CACI of Arlington is down 12 percent this year.

"In the 1990s, the federal IT budget was growing faster than the overall defense budget. Now that has switched," Loomis said. "You don't have to put the next generation of financial software in place in a time of war, so we tend to see a number of those engagements slow down."

In the long term, the defense companies' fate could depend on the ballot box and the war. "I am positive on defense stocks still, but there is cautionary note in background. There could be potential cuts to the budget, particularly if we get a Democratic president and Democratic Congress," said Richard Tortoriello, equity analyst for aerospace and defense at Standard and Poor's.

Republicans have held down funding for non-defense projects, which has helped the Pentagon budget grow, Strauss said. "If Democrats focus on [increasing] non-defense discretionary spending, it will be difficult for the defense budget to continue to go up," he said.

And what happens if the war ends? Some analysts think the big players such as Lockheed Martin and Boeing could benefit as the focus returns to the long-range transformation of the military. "After we get out of Iraq, there has been a lot of investment activity that has been delayed that will be put back on track," said Scott Sacknoff, manager of the Spade Defense Index.

*Batteries Not Included

CATEGORY: Pseudo-Religion, Bunko

DIVISION: Products

NOTE: Modern Evil will be offering a Special Discount and Rush Delivery on this product this fall, just in time for the festive Halloween season.

Impress Your Friends. Zap Loved Ones. And order soon - Don't Be Left Out.

Police Seize Magic Trick From Preacher

Tue Jul 10, 8:49 AM ET

Ugandan police are holding a Ghanaian preacher over a stage magic device they fear may dupe people into believing they have experienced miracles.

Customs officials seized the Electric Touch device -- which magicians use to give small electric shocks to volunteers -- from "Prophet" Obiri Yeboah at the airport last week, the state owned New Vision daily reported Tuesday.

The pastor heads one of many Pentecostal churches in Uganda, receiving large sums of money from congregations seeking miracle cures for diseases or help with financial problems.

The Electric Touch device is usually sold in magic shops alongside card tricks, magic coins and disappearing balls.

"With a simple touch, make a fluorescent bulb glow on and off at your command, make confetti move, charge a spoon and watch as it shocks a volunteer!" says one online magic shop selling the device.

"People could be duped to think it is a miracle," the New Vision quoted Civil Aviation Authority security chief Herman Owomugisha as saying.

Officials are worried about the proliferation of "miracle" churches in Uganda, many of which claim to cure HIV/AIDS.


Killer Ghost Terrorizes Village

CATEGORY: Killer Ghost, Evil Spell

DIVISION: Products

NOTE: By Fall '07, Modern Evil will announce a line of services designed to help people in these types of situations - specifically regarding evil spells and their consequences.

Village School Under Evil Spell

Statesman News Service

DHENKANAL, July 6: Superstition has caused panic among the school children at the Jagannathpur gram panchayat as the presence of a ghost, at the Kageilo Janata School spread like wild fire, with the villagers speculating that the ghost is that of a child.

A team of doctors and the district inspector has visited the school. But the efforts to convince people have failed, and most of the villagers are convinced about the presence of the killer ghost.

According to them one student has died and four others have been hospitalized due to the evil spell cast by the ghost. Priyabrata Samal, a student of class VII went out to urinate and complained of reeling and eventually fell down. He was rushed to the hospital, but died on the way on Monday, the villagers narrated.

The very next day Saroj Das who used to sit beside Samal showed similar symptoms, but recovered, while a third boy Satyabrata Samal has also fallen unconscious.

The doctors who visited the school failed to find any outbreak of disease in the area. The district inspector of schools Mr Mayadhar Pany said that he too had visited the school.

He admitted that the villagers are firmly believing in the presence of the apparition.

The local administration has been trying to dispel such baseless apprehensions.

It has also undertaken tests of the tubewell water to find out whether the water has been contaminated or not. Study at the school has been hampered because of the rumor that has gained wide credence.


Insurable Interests are Everywhere

CATEGORY: Death Insurance, Secret, Law Suit

DIVISION: Products

NOTE: Breaking the waves as usual is WalMart, by taking out life insurance policies on their employees without their employees knowledge or consent. Fantastic! We at Modern Evil believe this is a wonderful new revenue stream and can be applied to every business.

By the fall, we will provide an easy Do-It-Yourself life insurance kit called "Insurable Interests", complete with a registered insurance company, so that everyone can take out life insurance policies on their employees, strangers, or anyone.

Husband Files 'Dead Peasant' Suit Against Wal-Mart for Collecting Insurance in Spouse's Death

By Emanuella Grinberg

Court TV

When Karen Armatrout died of cancer in 1997, her husband, Richard, collected a modest amount in life insurance benefits from her employer, Wal-Mart.

But Armatrout claims that, unbeknownst to him, Wal-Mart also collected on a life insurance policy, one the company took out on Karen Armatrout years before without her knowledge.

This week, Armatrout filed a class-action complaint seeking what his lawyers estimate might be $80,000 in benefits that Wal-Mart supposedly collected "in bad faith" on a corporate-owned life insurance policy.

Armatrout's "dead peasant" suit, filed Wednesday in Tampa, Fla.'s U.S. District Court, accuses Wal-Mart ofmaking money off her death without having a valid claim to her estate.

Typically, such a stake, known as an "insurable interest," is reserved for individuals so closely connected to the person insured that he or she would suffer significant financial damage if the person died.

The complaint also charges that the Arkansas-based corporation misappropriated Karen Armatrout's name and personal information for the purposes of taking out the policy.

"Wal-Mart and the insurers used employees' private information to buy and sell policies," Armatrout's Texas attorney, Mike D. Myers, told "As matter of public policy, Wal-Mart should not be permitted to keep the policy's benefits because it did not have the necessary insurable interest in the lives of its rank-and-file employees to warrant being a beneficiary."

From 1993 to 1998, Wal-Mart was not alone in reaping the tax benefits associated with corporate-owned life insurance, which came to be known by critics as "dead peasant" insurance, based on a character in Nikolai Gogol's "Dead Souls" who buys up the contracts of recently deceased serfs.

Lawyers for Armatrout, who say that Wal-Mart took out such policies on 350,000 "rank and file" employees like Karen Armatrout during that time, have also participated in lawsuits against Golden Corral, Winn Dixie and Camelot Music.

The attorneys, who have brought three identical lawsuits against Wal-Mart in Texas, Oklahoma and Louisiana, say the company made use of favorable tax regulations in Georgia, which allowed the company to take out corporate-owned life insurance policies without the employees' knowledge.

Wal-Mart settled the suits in Texas and Oklahoma, where the company paid back 100 percent of the benefits, amounting to just over $5 million.

Along with Armatrout's case in Florida, another suit is pending in Louisiana.

In the previous cases, Wal-Mart attempted to argue that Georgia law applied because that was where the policies were purchased and paid out. But the courts found that the proper venue for deciding whether Wal-Mart had an insurable interest was thedeceased's state of residence.

Only six states, Delaware, Georgia, New Jersey, North Carolina, Pennsylvania, Vermont, allow companies to take out life insurance policies on their employees without notifying them. Most states have laws requiring that companies advise their employees and seek their consent before purchasing the policies.

Myers says he is hopeful that the precedents set in the other cases bode well for the Florida case, where he is seeking class-action certification for an estimated 80 plaintiffs in addition to Armatrout.

"I'd rather be where we are now rather than after losing three in a row," Myers said.

Representatives for Wal-Mart did not return calls for comment.


"Priest" Brand Perfumes

CATEGORY: Religious Sales, Iconography

DIVISION: Products

COMMENTARY: Why didn't we think of this?! A "Priest" brand! Clothing, gear, consumables - the works! Taking something so common, so omnipresent in world culture, and trademarking it so that you can make a killing on the free market. This is such a good idea Father Jankowski that we'll race you to it.

Priest Plans His Own Perfumes

Tue Jul 3, 2007 9:41AM EDT

WARSAW (Reuters) - A prominent Polish cleric known for preaching against communism and for his anti-Semitic remarks said on Tuesday he planned to launch perfumes, clothing and cafes branded with his image.

Father Henryk Jankowski took part in strikes which led to the end of communism in 1989 as part of Solidarity movement. He was later suspended from preaching for a year after insulting remarks about Jews.

Setting out his plans, Jankowski told the daily Dziennik newspaper that his initiative would "do everyone good."

"I am for it as long as it serves a good purpose. If necessary I will also sing and dance," he said.

The money from the initiative would go to the "Father Henryk Jankowski Institute," which says it supports charities and social projects.

Jankowski, who already has a wine branded with his image under the name "Monsignore," said he would be on the panel for "castings" of waitresses for the 16 cafes he plans to open in major Polish cities.

Jankowski is admired by many Catholics for his role in supporting Solidarity.


The Validity of a Blood Promise

CATEGORY: Blood Pact, Business Contract

DIVISION: Modern Evil, Legal

NOTE: Whether signed in blood, sweat, tears, ink or any other marking fluid, a contract is a contract. We encourage the plantiff in this case to contact us as soon as possible for further legal recourse.

Judge: Blood Promise Can't Be Enforced

Tue Jun 26, 4:46 PM ET

SANTA ANA, Calif. - A Nietzsche-quoting judge said a promise penned in blood by a businessman was not an enforceable contract. Superior Court Judge Corey S. Cramin ruled Monday that Stephen Son could not be forced to repay Kim Jin-soo more than $140,000 that Kim provided to Son's companies, not to Son himself.

Son punctured his finger and drafted the promise in a restaurant after his companies accepted cash from Kim but failed to turn a profit.

Son was not required to guarantee those transactions, the judge said.

"Blood is the worst of all testimonies to the truth," Cramin said, paraphrasing German philosopher Friedrich Nietzsche.

Kim's attorney, Richard Radcliffe, said his client might appeal.

"We think the blood speaks for itself," he said.

The lawsuit and purported contract dealt with more than $100,000 that Kim invested in a company run by Son in April 2003, when the two lived in Korea.

Later, Kim lent $40,000 to a second Son company in California.

The blood promise was written in October 2004 after the two men had moved to California

It read, "Sir, forgive me. Because of my deeds, you have suffered financially. I will repay you to the best of my ability," according to court filings.

Kim sued in January 2006.


Dead Man Laughing

CATEGORY: Gallows Humor, Execution Comedy

DIVISION: Modern Evil, Sales

NOTE: Death Row humor is a specialty of Modern Evil. Our upcoming publication of killer jokes, entitled "Laugh, I Nearly Died!", will be out in time for the holiday season. Unfortunately though, it won't be soon enough for Mr.Knight. Please visit his MySpace site anyway.

Man Set for Execution Wants to Die Laughing

Mon Jun 25, 2007 5:46PM EDT

By Jim Forsyth

SAN ANTONIO, Texas (Reuters) - A Texas man scheduled to be executed on Tuesday wants to die laughing.

Patrick Knight, 39, has been soliciting jokes on the Internet and plans to tell one of them before receiving a lethal injection, Texas Department of Criminal Justice spokeswoman Michelle Lyons said on Monday.

"He says he wants to keep his execution light," she said.

Knight was sentenced to die for the August 1991 murder of his two elderly neighbors in Amarillo, Texas.

Lyons said a friend of Knight's set up a page on the social networking Web site to solicit jokes, and "hundreds" of suggestions have arrived in the mail.

"I'll be enjoying my last days on Earth," Knight wrote on the Web site. "I'm not asking for pen pals, but I'm asking you to spread the word that I am holding a contest. I want people to send me their best jokes, and to keep me and others with (execution) dates laughing."

Texas leads the nation with 396 executions. None of those put to death have ever joked about it, Lyons said.

"We've certainly had some people who have recited a poem or a Bible verse, some people who have asked forgiveness or who pray," she said. "This is, to my knowledge, the first time anybody has told a joke as their last words."

While she says Knight will be allowed to tell his joke, none of his executioners in the state death chamber at the Walls prison unit in Huntsville, Texas will be laughing, Lyons said.

"Everybody who is there takes it very seriously and will not be participating in the joke," she said. "So knock-knock jokes are out."


Outsourcing: How NOT to Hire the Qualified

CATEGORY: Fake Jobs, Fraud Hiring

DIVISION: Investments

EDITORIAL: Letter-of-the-Law compliance has created wonderful companies such as Burson-Marsteller, Microsoft, and Walmart. Now with this helpful video, everyone can learn how to put the power of outsourcing and minority hirings to work for them. Thank you LARRY M. LEBOWITZ, ESQUIRE [412-297-4979] of Cohen & Grigsby.