Afghanistan, Rent Assistance, Onlyfans, Bitcoin, Footloose, and Jacob Wohl
If you didn’t hear, the US pulled troops out of Afghanistan this month, and the Afghan government we had been propping up failed in a matter of days. The president fled to the UAE, and may have taken $169 million dollars with him. Now that the Taliban are back in power after 20 years, it’s worth asking - what did we get done there?
According to the AP, we lost almost 2,500 American troops, almost 4,000 military contractors, and the Afghans lost well over 150,000 civilians, military, and Taliban fighters in the war.
However! The last 20 years have been very good for business, both here and in Afghanistan. I mean “business” in a narrow sense of the word, of course, because it was a small number of people getting very wealthy off the war. There was the first Afghan president, who pocketed millions from the CIA in addition to the proceeds from his brother’s drug trafficking business. And in the US, there were the defense contractors, who reaped decades of profits.
The Independent has a list of some of the worst boondoggles in Afghanistan:
The US Agency for International Development spent $176m building a 101km road between Gardez city and Khost Province. Less than a month after it was finished, Sigar inspectors found five segments were destroyed and portions of two other segments had washed away, according to an October 2016 audit.
The US spent $28m buying uniforms for the Afghan military with camouflage patterns that didn’t match the environment. But Pentagon officials said the design was chosen because Afghanistan’s minister of defence at the time thought it looked good.
Over 15 years, the US spent about $8.6bn on Afghan counter-narcotics efforts. Still, by 2017, poppy cultivation and opium production reached record highs and “drug production and trafficking remain entrenched”
You get the idea. Whatever your thoughts on the war in Afghanistan, it’s important to keep in mind that many of the people who are now going on television and being quoted in articles had a direct financial interest in the war. Jason Linkins explains:
As Harvard public policy professor Linda Bilmes told Marketplace this week, “the whole system was set up in a way to enable contractors to rip off the government.” And Foreign Policy’s C. Christine Fair described the “bewildering corruption by U.S. firms and individuals working in Afghanistan,” in which Afghans were, in many instances, straight-up defrauded.
“The weapons biz also had [financial] ties to 2/3rds of the Afghanistan Study Group, currently being cited by The Washington Post and Wall Street Journal editorial boards as offering an alternative to Biden’s withdrawal.” Dig into, if you will, this week’s Politico story about “Biden’s two tragic Afghanistan missteps,” which was “presented by” Lockheed Martin.
With depressing regularity, large government programs in the US are regularly defrauded by big companies, whose executives hide behind the corporate shield and suffer no personal consequences for the theft. In the case of the military industrial complex, however, the grift can result in real human misery. The AP article cited above talks about the humanitarian gains made in Afghanistan by well-meaning troops and aid organizations, and they have a point. But, while we were helping, defense contractors were siphoning billions of dollars off for themselves, and our military strategy was killing and wounding tens of thousands of innocent civilians.
We’ve come a long way from the victory gardens and patriotic shared sacrifice of World War 2. These days, in the US at least, war is just another revenue stream, and the people arguing in favor of it are doing so for their own job security.
The federal government has a $46.5 billion dollar aid program to help pay rent accrued during the pandemic. As of July, only $5.1 billion had been distributed. What happened? According to federal officials, states and cities are holding things up:
The program is administered by the federal government, but it is up to states to build out a system to deliver aid to struggling renters and landlords, and that has been the main source of its problems.
This is a problem! Potentially millions of people are facing eviction when the latest federal moratorium expires, though some cities have enacted their own eviction prevention programs. Obviously, if the government is willing to shovel piles of cash to states and cities, they should take it as quickly as possible. The feds even set up a new fast-track system:
On Wednesday, the Treasury Department rolled out a slate of incremental changes intended to pressure states to move more quickly. But administration officials continue to blame the program’s struggles on local officials, many of whom are reluctant to take advantage of the program’s new fast-track application process, which allows tenants to self-certify their financial information.
In recent weeks, local officials have complained that moving too fast on aid applications could lead to errors, fraud and audits; the White House has countered by telling them those risks are insignificant compared with a wave of evictions hitting tenants who did not get their aid quickly enough to keep a roof over their heads.
“They can and should use simpler applications, speedier processes and a self-attestation option without needless delays,” Mr. Sperling added.
Hmmmm. We’ve talked a little about the fraud potential in fast track programs. I’m sure it’ll be fine. The other thing the rental assistance program shares with unemployment programs is the reluctance some have to take advantage, because our society is conditioned to feel like government assistance is bad, even during a global pandemic:
It will take local housing courts weeks to clear the backlog of eviction cases delayed by the moratorium. But many owners, especially small landlords, have rejected the federal aid, arguing that evicting nonpaying tenants is not only their right but the most effective way of ensuring their revenue is not interrupted in the future.
Ah, landlords. Anyhow, here’s hoping the new measures get as much money into the hands of renters and landlords as possible before the Supreme Court strikes down the latest federal moratorium and millions of people are made needlessly miserable - and potentially thrown out on the street - because our government is incompetent at every level.
Update: the Supreme Court already struck it down, in a 10pm “shadow docket” ruling last night. Here is an tweet thread about the ruling from a Slate legal analyst. It’s not good.
OnlyFans made news last week when it announced it was changing its policy on sexually explicit content. Sexually explicit content may not be the only thing people use the service for, but it’s certainly one of its central attractions. Many jokes were made comparing OnlyFans to blogging site Tumblr, which banned adult content in 2018 after Verizon acquired it from Yahoo. Tumblr, once worth over a billion dollars, was sold in 2019 for $3 million. As one person said at the time:
america's lounge singer @KrangTNelsoncongrats to tumblr on being worth less than this one fish https://t.co/4FO2whfWkv
So, why was OnlyFans about to make a dramatic change to its business model that could Tumblr-ize it? The banks:
[Tim] Stokely named three major banks that refused service because of “reputational risk” associated with the UK-based OnlyFans’ sexual material: Bank of New York Mellon, Metro Bank, and JPMorgan Chase. He said BNY Mellon specifically had “flagged and rejected” every wire transaction involving OnlyFans, threatening its ability to pay creators.
Rewinding a little, the concern from “banks” likely stemmed from an upcoming MasterCard rules change that takes effect in October. XBIZ explains:
[Mitch] Farber pointed out that although that oversight is ultimately the responsibility of the site operators, Mastercard now will be holding banks (and in turn ISOs) responsible to make sure this is the case. Mastercard’s requirement that banks “ensure that sellers have documented consent as well as age and identity verification for those involved in the content before being able to process payments,” will result in that becoming “part of the merchant account underwriting process, as well as ongoing site reviews that undoubtedly will be more frequent.”
In plain English, MasterCard is now going to hold banks and payment processors accountable if websites they accept payments for don’t have detailed documentation proving all actors appearing in videos and photos on their websites are 18 years of age or older. Previously, subscription-based or “paid” adult websites had to have proof of age on file under US law, but sites featuring “user uploaded” content did not - which includes OnlyFans.
But…OnlyFans does require verification from its performers. So why were the banks acting so aggressively towards them? The stigma around adult content goes back a long way - payment processors and banks have long refused to work with porn companies, despite the content being legal.
In 2018, a law called FOSTA-SESTA was passed under the guise of fighting “trafficking”. One of its (likely intended) side effects was to make it more difficult for sex workers to make money online. Ebay-owned Craigslist took down its “personals” section, which was sometimes used to solicit sex work. Operators of websites that served sex workers were arrested and criminally charged. Crusaders against porn and sex work had, with overwhelming support from US lawmakers, eliminated many of the options sex workers used to make money online.
Then, the people behind FOSTA turned their attention to other websites, namely “tube” sites like PornHub, and creator sites like OnlyFans. The most widely-read assault came from the NYT’s Nicholas Kristof, who wrote a front page story decrying the lack of content moderation on PornHub. This led to threats from the card brands, and PornHub was forced to remove a large amount of its content that couldn’t be verified. This was a good thing - some of that content was undoubtedly illegal. But, like FOSTA, this was a stepping stone for anti-pornography religious groups to put pressure on more sites to shut down. Melissa Gira Grant explains:
Then, in a passing mention, [Kristof] introduces the work of Exodus Cry—though he omits the group’s name. “An organization called Traffickinghub, led by an activist named Laila Mickelwait, documents abuses and calls for the site to be shut down,” Kristof notes.
“This is a war with big porn,” Mickelwait states unequivocally in a November post on her influencer-chic Instagram account. Mickelwait’s current job title is director of abolition at Exodus Cry, “a faith-based organization modeled on the character of Jesus, as the group describes itself, which “fights sexual exploitation and the sex industry” and is the home of the Traffickinghub campaign. Exodus Cry uses “abolition” in the sense used by anti–sex work groups, meaning the abolition of the sex trade, including prostitution and porn, by means of the criminal law.
Whether Kristof was a knowing accomplice or not, his piece and the subsequent crackdowns are helping fringe religious organizations pursue their goal of “abolishing” the sex trade entirely.
During the pandemic, many sex workers turned to OnlyFans as a way to supplement their incomes, and it was a boon for those who were able to use the platform to acquire a subscriber base. Hot on their heels were US lawmakers, sending a letter to the Attorney General to investigate the site for - you guessed it - child trafficking:
The lawmakers called on Attorney General Merrick Garland to look into the the prevalence of child sexual abuse material on the website OnlyFans.com and the specific steps it takes to ensure minors are protected from exploitation. They say the network has become a “major marketplace” for buying and selling child pornography.
With MasterCard’s proposed changes, its banks harassing it and threatening to shut it down, and a quarter of the US Congress accusing it of being a child sex market, OnlyFans was backed into a corner. It announced it was going to ban “sexually explicit” content on the platform, essentially anything more racy than nude photos. The anti-porn crowd had won, and was essentially taking down the biggest platform for sex workers left on the Internet.
On Wednesday, the company said it “secured assurances necessary to support our diverse creator community,” suggesting that it has new agreements with banks to pay OnlyFans’ content creators, including those who share sexually explicit material.
“Thank you to everyone for making your voices heard. We have secured assurances necessary to support our diverse creator community and have suspended the planned October 1 policy change,” the company said in a tweet.
Apparently the public shaming of banks and payment processors worked? Excellent. Small victories aside, it’s another reminder that the US banking system, and the Puritanical lawmakers who, in 2021, still think porn is morally objectionable and sex work should remain criminalized, have outsized influence on Internet companies, even ones that aren’t located here.
It is easy to forget, as an American, that other countries have legal systems different from ours. In America, when you commit a crime and the police seize the money you made doing the crime, they generally keep all of it. Ill gotten gains, and so forth. Apparently in Sweden the rules are a little different:
Authorities are being forced to pay the man 33 BTC, around $1.5 million, after his illegally obtained bitcoin appreciated while behind bars.
According to The Telegraph, the jailed supplier has locked up two years ago after being convicted for selling drugs online and illegally amassing 36 BTC via those sales.
Luckily for him, the prosecutor of the case, Tove Kullberg, used the fiat value of the coin to make her initial case. Ergo, the court judged that the man’s crypto is seized because it was earned illegally, which was worth $100,000 at the time. However, in the two years since the original conviction, the price of bitcoin has skyrocketed and the dealer’s crypto stash had appreciated to more than $1.5 million. The problem for them is that just 3 BTC was needed to satisfy the court’s original settlement of $100,000 based on the same 36 bitcoins. That leaves 33 BTC left from the criminal’s wallet that Sweden must now return.
This is delightful. So this guy sat in jail for two years and made $1.5 million dollars on his crypto holdings. I hope the first thing he does after release is go on Reddit and brag about his diamond hands. His crew in prison was #HODL Gang, etc.
According to this helpful article on A$AP Rocky’s time in Swedish prison, the cell our crypto genius spent his time in looks like an IKEA display:
Not too bad! I am not suggesting that crime does pay, but it is nice to write about a Bitcoin story that has something resembling a happy ending, assuming he can remember his wallet password after two years in the clink.
Footloose: Charlie Smith’s Offshore Chronicles
I try not to give tips to criminals, but one thing I often advise against is putting evidence of your crimes in the public record. Matt Levine has called my attention to an SEC criminal action against a sophisticated network of penny stock manipulators slash money launderers:
Right, see, if you just want to do legal trading, you can go to Robinhood or whatever. If you want to do crime trading, you will need a more full-service broker, one whose business includes keeping you out of jail. Or trying to.
The criminal complaint is here and I will wait for some other news outlet to investigate the gory details of this case before writing about the crime part of it, because it sounds interesting and court documents are generally very boring. But! What I do want to briefly mention is this bit, on page 15:
In 2002, [Frederick] Sharp wrote a fictionalized book about securities fraud and money laundering in which he described illegal conduct that parallels the Sharp Group’s business model.
This is the only mention of the book in the complaint. Here is the book on Amazon. It has a single one star rating that is, to put it mildly, cheeky:
Now, the book was probably not the reason Sharp and his crew were busted - he was outed in the Panama Papers, which were more widely read than his self-published novel. That said! If you feel the burning desire to write about the crimes you are doing, maybe just put it in a Word document and hide it somewhere on a hard drive, or print it out and put it in a safe, something like that. It’s less likely to be used as an exhibit in your criminal trial.
Like Matt Levine, I am having a laugh thinking about the SEC investigator who was tasked with reading Sharp’s novel looking for clues. I hope they learned a thing or two.
How is Jacob Wohl Doing?
The Federal Communications Commission proposed a record-breaking $5 million fine against right-wing political operatives Jacob Wohl and Jack Burkman on Tuesday, after an investigation by the agency found that the two men appeared to have violated US robocalling laws.
As usual, everything about the case is very, very dumb:
As part of its investigation, the FCC said, officials interviewed consumers and also reviewed subpoenaed call records and recordings provided by two dialing service providers that Wohl and Burkman had hired to conduct the robocalling campaign. The 1,141 calls had been placed on Aug. 26 and Sept. 14, 2020, identified Wohl and Burkman by name and used Burkman's phone number for the caller ID, the FCC added.
If you’re going to place illegal robocalls trying to suppress voters, don’t use your real names or numbers on them. Also don’t admit to it in a different lawsuit:
The FCC said Burkman and Wohl have "admitted, under oath, their involvement in the creation and distribution of the robocalls," citing court transcripts from [the New York] lawsuit.
I wonder who has the more enjoyable job, the person reading Fred Sharp’s novel or the person reading Jacob Wohl’s court transcripts.
NYT - “Facebook had prepared a similar report for the first three months of the year, but executives never shared it with the public because of concerns that it would look bad for the company…”
Motherboard - “"I think the loophole is the fact that it is used and sold over the counter for pets and not controlled," he said. "I can tell you that eBay will not allow any title to have the word ‘ivermectin’ in it. Maybe Facebook is just greedy for revenue."”
Vanity Fair - “You might be made to feel like you’re in charge, but in reality, you’re still the office temp. Run afoul of the rules—or simply end up on the wrong side of a rebrand—and there isn’t even a severance package waiting on the other side.”
Tips, thoughts, or copies of self-published crime guides to firstname.lastname@example.org