National Intelligence Summary for 24 August 2018 – Forward Observer Shop

National Intelligence Summary for 24 August 2018

The National Intelligence Bulletin is a weekly look at national security, domestic systems disruption, the risk of failing critical infrastructure, and threats to social, political, economic, and financial stability in the United States. This report is available each week for Intelligence subscribers.


In this National Intelligence Bulletin… (4,031 words)

  • InFocus: Let’s talk about impeachment…
  • Heritage: China could target U.S. elections
  • Iranian ‘sleeper cells’ in the U.S.
  • DOJ: Iranians charged for operations inside U.S.
  • Mexican radio station to broadcast Chinese propaganda
  • ACLU: Banning Alex Jones could set dangerous precedent
  • Parasitic disease from Central America affecting 300,000 Americans
  • DOJ sentences man for distribution of explosives for a terror attack
  • Hayden: Impeachment is a bad idea
  • Mastercard doubles down this week
  • FireEye: Iranian influence campaign aimed at U.S.
  • Feds take action to close doors to Chinese investment
  • DHS to increase role in cybersecurity
  • Army’s senior enlisted soldiers tour southern border
  • Student activists pull down another Confederate statue
  • German FM: We must create financial system independent of U.S.
  • Economic/Financial Roll-Up
  • And more…


InFocus: It’s been a busy week, so let’s talk impeachment. Former Trump campaign manager Paul Manafort was convicted on eight counts of tax evasion, fraud, and other crimes. Former Trump attorney Michael Cohen plead guilty to eight counts (mostly tax evasion), and implicated the president in two campaign finance crimes. Certainly not a good look for the president, but there’s also nothing in those indictments that point towards Russian collusion. So, what next?

This is all now in the hands of the Congress. Specifically, we could be talking about impeachment proceedings next year since the Department of Justice cannot indict a sitting president.

Earlier this week, Mark Levin was on Hannity explaining that Trump’s involvement in alleged campaign finance violations isn’t as bad as it sounds. Levin, an attorney himself, said that the $130,000 payment to Stormy Daniels (and another payment to a second woman) was a private contract and, since the money didn’t come out of the Trump campaign, there was no violation of the law. Furthermore, he stated that because no law was broken, Cohen pleaded guilty to non-crimes.

“The general counsel for the Clinton mob family, Lanny Davis, he had his client plead to two counts of criminality that don’t exist… A campaign expenditure under our federal campaign laws is an expenditure solely for campaign activity. A candidate who spends his own money or even corporate money for an event that occurred not as a result of the campaign, it is not a campaign expenditure.” – Attorney Mark Levin

But Cohen claimed in his testimony that the payments were made to influence the election; specifically, to keep Stormy Daniels and another woman from speaking out and harming candidate Trump’s chances in the election. That’s where the campaign finance debate begins: was this a private payment or a campaign payment? Levin says that it doesn’t matter because the payment didn’t come from campaign funds.

But other legal scholars say that if the payment was campaign-related then, at the very least, the amount exceeded campaign finance limitations. Also, campaign expenditure reports should have been filed. Based only on what’s come out so far — at most –Trump could be named an unindicted co-conspirator to break campaign finance laws. The case would go to the House to determine whether or not this is an impeachable offense, and they could begin impeachment proceedings if there’s enough support. There clearly isn’t right now, so get ready for this to drag out into next year if the Democrats win back the House. Earlier this week, former White House advisor Steve Bannon described November’s election as a referendum on impeachment. Tuesday, 06 November 2018 could determine whether or not the president is impeached.

The concern going forward is two-fold. The first is that despite (or perhaps in spite of) 30 hours of interviews with White House legal counsel Don McGahn, the Mueller team subpoenas the president to seek a “perjury trap”. In this scenario, Mueller wants to get the president on the record and ask him questions in a way that the team can say that the president contradicted previous statements made by others (like Manafort or Cohen or McGahn). The Mueller team could then refer the president for impeachment over perjury. The second scenario going forward is that the Mueller report finds that President Trump 1) “conspired” to influence the election, either with Russia or through the Cohen payments, because conspiracy is what you charge the president with when you don’t have enough evidence to charge or convict him on a specific crime; or 2) obstructed justice when he tried to influence and then fired former FBI director James Comey.

Ultimately, President Trump’s future comes down to which party holds the House and Senate after January 2019. The likelihood that President Trump is impeached probably increases with the size of the Democrats’ victory in the House — if they do take the House. Those impeachment efforts will be made worse by a report from Mueller that paints the worst picture possible. Two-thirds of the Senate could then vote to remove the president from office, which is something I don’t see happening as long as the GOP holds the Senate in November.

A final word of warning on the House. Perhaps more important than impeaching the president is the power to constantly harangue him and other Republicans through the power of House committee investigations.

Chris Collins (R-NY) and Duncan Hunter (R-CA) are prime examples of the power of law enforcement has over sitting members of Congress. Both were up for re-election this year. Earlier this month, Chris Collins — reportedly the first Congressman to endorse Donald Trump for president — was arrested by the FBI and charged with insider trading. This week, Duncan Hunter, reportedly the second Congressman to endorse Trump, was charged with some serious campaign finance violations. Hunter’s been under investigation for two years, and is just now being indicted two months before his re-election. Meanwhile, Collins is still trying to remove his name from November’s ballot and replace it with another GOP candidate. Very good timing for Democrats, and it may be a lesson that the GOP learns again if they lose the House. Here’s why.

The chair of the House Permanent Select Committee on Intelligence is chosen by the majority in power, so if the Democrats take the House, there will be a Democrat leading the HPSCI. Furthermore, each subcommittee will also be led by a Democrat, giving the party considerable power to launch investigations with considerable resources at their disposal, leak selected information (like Adam Schiff, D-CA, has likely done), and work towards undermining their Republican opponents. Gen. Mike Hayden, former NSA and CIA Director, was interviewed on an online news network this morning and clearly explained that President Trump was the most norm-breaking president we’ve had in the modern era, and that the desire to break norms is apparent when your political opponent is doing it. There’s a sentiment among Democrats that ‘the guardrails are off’ with regard to established norms, and it’s certainly feasible that, coming off mid-term election results, they feel they have a mandate to solve the Trump problem and everyone who support him. We should be ready for another contentious period through 2020. – S.C.

Priority Intelligence Requirements

PIR1: What are the new indicators of systems disruption and threats to critical infrastructure?

PIR2: What are the new indicators of potentially disruptive social, cultural or political conditions or events?

PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?

PIR4: What are the new indicators of systems disruption and threats to the economic or financial industry?


PIR1: What are the new indicators of systems disruption and threats to critical infrastructure?

Heritage: China could target U.S. elections

In a Fox News interview with Nile Gardiner of The Heritage Foundation, Gardiner says he believes that the Trump administration has been increasing its focus on Asia, particularly with regard to military capabilities within the region and enhancing strategic alliances there. When questioned about possible cyber attacks by the Chinese leading up to the U.S. midterm elections in the fall, Gardiner cited reporting detailing Chinese hacking attacks in recent months on the government of the state of Alaska, an important Chinese trading partner. According to Gardiner, the U.S. must add the prospects of highly sophisticated Chinese attacks to its existing portfolio of cyber activity threats posed by Russia, Iran, and North Korea. [source]

Iranian ‘sleeper cells’ in the U.S.

The Al Arabiya English website reports that intelligence officials and security experts are warning of the existence of Iranian “sleeper cells” operating in the U.S. According to the report, these cells are awaiting orders from the Iranian government in Tehran to carry out terrorist attacks against U.S. interests. The report goes on to say that attacks could be carried out by these cells or by Lebanon’s Hezbollah, which is active in Latin American countries. These countries could therefore be used as “an advanced launching pad” for attacks on the U.S. homeland or its interests in the region. During a hearing of the House Homeland Security Committee’s subcommittee on counterterrorism and intelligence, Emanuele Ottolenghi, a senior fellow at the Foundation for Defense of Democracies, said the networks are present in the U.S. and they are a threat. He also claimed that Iran’s terror networks in Latin America are run by Hezbollah, and that “sleeper agents enter America by posing as immigrants who develop legitimate businesses that are a front for their other activities”. [source]

DOJ: Iranians charged for operations inside U.S.

The U.S. Department of Justice returned an indictment charging Ahmadreza Mohammadi-Doostdar, 38 and Majid Ghorbani, 59, with allegedly acting on behalf of the government of the Islamic Republic of Iran by conducting covert surveillance of Israeli and Jewish facilities in the United States. The two were also charged with collecting information about American citizens and U.S. nationals who are members of the group Mujahedin-e Khalq, which advocates the overthrow of the current Iranian government. Doostdar holds dual U.S.-Iranian citizenship, and Ghorbani is an Iranian citizen who lives in California. The alleged acts took place between July 2017 and May 2018. [source]

Mexican radio station to broadcast Chinese propaganda

According to investigative reporter Bill Gertz, the proposed sale of a Mexican radio station to a pro-Chinese company is paving the way for China to spread Chinese-language propaganda towards southern California. The Federal Communications Commission still has to approve the sale of XEWW AM 690, but the deal would “turn the AM radio station from a Spanish broadcaster into a Chinese-language outlet capable of reaching over 600,000 Chinese Americans living in the San Diego-Los Angeles area”. [source] Analyst Comment: Not only does the Chinese Communist Party maintain a tight grip on their own people, but they also want to continue to surveil and influence Chinese living outside of China. This is actually a big deal because countries like Russia and China, which restrict access to information for their own people, are using America’s open and nonrestrictive society to push their own messages to their target audiences. There was a big push earlier this year to force Russia Today (RT) and other Russian-owned media outlets to register as foreign agents. Senator Marco Rubio (R-FL) plans on introducing legislation that forces Chinese-owned media outlets to do the same.

ACLU: Banning Alex Jones could set dangerous precedent

In a surprise opinion, an official at the American Civil Liberties Union (ACLU) expressed his concern that while social media companies should have the liberty to regulate what happens on their platforms, it also poses a risk to how “hate speech” is defined. “Governments at least purport to be acting solely in the public interest, but [social media] platforms are making these decisions based on what’s in their financial interest. So their interest might be in avoiding controversy, but do we want the most important speech platforms in the world to avoid controversy?” [source] Analyst Comment: Social media giants like Twitter and Facebook do have a free speech problem. Being that they’re private companies, they have control over the terms of service, however, there are groups actively pushing for these platforms to be regulated, seeing as how they’ve become a public forum for national issues. It’s a long shot right now, but it’s something I’m watching. The problem, if no solution is found, is that these companies act as gatekeepers to the voting public. Facebook recently removed an ad by a republican candidate who described the horrors of communism her parents escaped before they immigrated from Cambodia. [source] Facebook says the ad was too graphic, but is Facebook now having an impact on that election? That’s the crux of the debate, and it’s why some want regulations that prevent social media platforms from interfering in political speech.

Parasitic disease from Central America affecting 300,000 Americans

A parasite originating in Central and South America has affected 300,000 Americans with ‘Chagas disease’. The disease is transmitted by an insect and “causes chronic heart disease in about one-third of those infected”. The American Heart Association reports that “Infection occurs when feces from the infected blood sucking insect triatomine enters the skin through the bite site or in the eye.” Doctors warn that “people should avoid sleeping in houses with un-plastered adobe walls and/or thatch roofs, and avoid unpasteurized sugar cane juice, açai fruit juice and other juices when visiting affected countries.” [source] Analyst Comment: The report states that the insects and disease have been spreading into the United States for the past 40 years. The increase in migration from Central and South America is a likely culprit in the spread of both.

DOJ sentences man for distribution of explosives for a terror attack

According to the U.S. Department of Justice, a 31-year-old Indiana man was sentenced to 15 years in prison for the distribution of information related to the manufacture and use of explosives. The man, Marlonn Hicks, distributed the information intending it to be used in the furtherance of a violent crime. Hicks was described as a man who transformed from a vocal online supporter of ISIS to a terrorist aspirant. On June 21, 2016, Hicks discussed his plans with an FBI source he believed to be an ISIS supporter. This was nine days after the Pulse nightclub terrorist attack in Orlando, Florida, which apparently inspired Hicks’ plans. Hicks sent the source two manuals on how to manufacture explosives and poisons. He also discussed carrying out high-profile terrorist attacks in the name of ISIS with multiple sources. Hicks was arrested in July 2016 and remained in federal custody until his sentencing. [source]


PIR2: What are the new indicators of potentially disruptive social, cultural or political conditions or events?

Hayden: Impeachment is a bad idea

In an interview this morning on Hill TV, former NSA and CIA Director Michael Hayden said that impeachment “would be a bad idea”. “If President Trump is somehow forced to leave office before the end of his first term, one-third of America… will believe it was a soft coup,” Hayden said. He added, “the only way we move beyond this in any way that’s healthy for our democracy is we vote.” Hayden has routinely criticized the president, but told the hosts that he does not believe that President Trump has committed treason, as many on the Left have suggested.  [source]

Mastercard doubles down this week

After last week’s reporting that included Mastercard orchestrating Robert Spencer (JihadWatch) being kicked off Patreon, now David Horowitz’s Freedom Center reports that Mastercard and Visa have both restricted his ability to take donations using their processing. In a statement, Horowitz writes: “This is the work of a Soros funded Media Matters and Southern Poverty Law Center operation… The reason Mastercard and Visa gave us for cutting us off and thus sabotaging our online fund-raising operation is that the SPLC told them that we were a hate group.” After Breitbart picked up the story, Visa reached out to deny any involvement. [source] Analyst Comment: This is a trend that’s picked up steam — specifically the trend of corporations denying services to those it finds politically unpalatable — and the concern is that it becomes a major, mainstream policy decision targeting conservative and right wing businesses and organizations. I’ve talked a bit about economic dislocation, a form of economic warfare where a belligerent attacks the income stream or sustainability of a person or movement. This is economic dislocation. It may be that Mastercard doesn’t want boycotts or negative attention for servicing individuals listed on the SPLC Hate Watch list. In that case, it’s entirely an economic decision. But een if that’s the primary reason, the effects are still the same: the SPLC is promoting economic dislocation against conservative, non-hate groups.

FireEye: Iranian influence campaign aimed at U.S.

According to the cybersecurity firm FireEye, a suspected influence operation by probable Iranian actors dates back to at least 2017. This operation has used inauthentic news sites and social media platforms to “promote political narratives in line with Iranian interests”. The narratives include “anti-Saudi, anti-Israeli, and pro-Palestinian themes, as well as support for specific U.S. policies favorable to Iran, such as the U.S.-Iran nuclear deal (JCPOA)”. The FireEye report concludes that such influence operations are becoming more common and extend beyond Russia, which has been the focus of such activities over recent years. FireEye assesses such influence operations as an evolving threat that can “be deployed irrespective of the particular political or ideological goals being pursued”. [source]



PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?

Feds take action to close doors to Chinese investment

Last week President Trump signed legislation broadening the scope of the Committee on Foreign Investment in the U.S. to include minority and passive investments in three areas: critical technology, infrastructure, and businesses that handle personal data. This represents a further tightening of the rules  to protect the country from Chinese espionage. Similar protectionist stances in Australia, Canada, and Europe are presenting challenges to China throughout the developed world. [source]

DHS to increase role in cybersecurity

The Department of Homeland Security (DHS), which characterizes its cyber security threats as “pervasive” and “increasingly sophisticated,” outlined a plan to be more effective in cybersecurity mission. Along with mandating stronger passwords with cooperating agencies, DHS will also increase coordination with private companies who have access to or oversee critical infrastructure, and work towards greater accountability for federal contractors and their sub-contractors. [source]

Army’s senior enlisted soldiers tour southern border

U.S. Army Command Sergeant Major John Wayne Troxell and a team of other senior enlisted soldiers toured 1,000 miles of the U.S. southern border to learn about the concerns and challenges of operating there. Defense Secretary Mattis approved a plan for up to 4,000 National Guard soldiers to aid U.S. law enforcement on the border security mission. About 2,100 are currently deployed to the region. “As we continue to get after bad people around the world, it was important that we brought this [summit] together so that we could see firsthand not only the interagency fusion that’s happening between the border, but more importantly, [we saw] the passion and quiet professionalism of every border patrol agent that’s on some of the roughest terrain that you can find,” CSM Troxell said. “They don’t have all the resources or people they want to have, but through the use of the ‘big three’ – people, technology and tactical infrastructure – they’re mitigating the risks as best they can, and leveraging our DoD assets to assist and continue to get after the mission.” [source]

Student activists pull down another Confederate statue

On Monday evening at about 7:30 p.m., more than 300 people gathered at the Peace and Justice Plaza near the University of North Carolina Chapel Hill campus before marching to the controversial “Silent Sam” Confederate statue and calling for its removal. By 9:30 p.m., the protestors had toppled the statue. At least one person at the protest was arrested for masking their face and resisting arrest, according to a university spokesperson. The University of North Carolina police have reportedly begun a criminal investigation into the incident. North Carolina Governor Roy Cooper said in a statement that he shared in the protestors’ “frustration” but condemned the destruction of public property. The university system’s board chair and president described the incident as “mob rule”. [source]


PIR4: What are the new indicators of systems disruption and threats to the economic or financial industry?

German FM: We must create financial system independent of U.S.

Germany’s foreign minister wrote this week that he wants to create “payment channels independent of the U.S.,” and bring an end to U.S. dominance in that space. “[I]t is essential that we strengthen European autonomy by setting up payment channels independent of the US, creating a European Monetary Fund and building an independent SWIFT system.” [source] Analyst Comment: The German FM is angry about U.S. unilaterally pulling out of the Iran deal and threatening sanctions against European businesses who do business with Iran. SWIFT is a global payment system, and U.S. officials have been able to intercept international monetary transactions using U.S. dollars in cases where sanctions were being violated. The German FM wants to end reliance on a system where the U.S. wields that kind of power. For the same reason, Russia has also developed its own global payment system aside from SWIFT. There’s undoubtedly a push to get away from using the USD as the standard reserve for global payments, but this is another data point indicating that reliance on infrastructure dominated by the U.S. is becoming inadvisable for some countries. The long term implications are a threat to the USD. I remember reading that the Great British Pound (GBP) lost 50 percent of its value to the USD over a 30-year period following the end of WWII. Through the period where Great Britain lost its major colonies to independence, the demand for GBP as a currency fell. So did its value and purchasing power. It’s feasible that the same thing will happen to the USD as U.S.-denominated trade is replaced by other currencies (or oil or gold, etc.).


Economic/Financial Roll-Up

– Chinese trade representatives will be meeting with Trump administration officials this week to discuss scaling back the trade war. I’ve commented here before that China’s economy has some weakness being exploited by the trade war. China watchers are telling people not to be hopeful for successful talks, perhaps in part because the Trump administration wants to really drive the point home for Xi Jinping and the Chinese Communist Party.

– The U.S. stock market is set to break a record this week as the longest bull run in history. This period will beat out the expansion seen in the 1990s until the dot-com bubble burst brought it to an end.

– Moody’s Investors Service recently published these two charts showing weak economic performance in credit cards and auto loans. The increasing percentage of 30-day delinquencies in both sectors should be a warning of defaults during the next recession.

– Here’s an interesting map from Value Penguin showing credit card usage across the country.

– This week, the S&P 500 made a record as the longest bull market in history, quadrupling since hitting lows in 2009.

– Chinese officials are in talks with their U.S. counterparts to bring an end to the trade war. As a result, Commerce Secretary Wilbur Ross says that he’s delaying the next recommendations for new tariffs (although additional tariffs on $16bn worth of goods were implemented both ways). From what’s being reported, it does not appear that the Trump administration is particularly interested in making a deal with China unless significant behavior is first modified. Trump wants an end to intellectual property theft and commercial/industrial espionage, currency manipulation, and unfair Chinese trade practices. Short of achieving that, the Trump administration may pursue a course of action that includes having China kicked out of the World Trade Organization.

– According to research from investment firm Piper Jaffray, the upcoming recession could double the Trump administration’s $1 trillion budget deficits by 2021. The Congressional Budget Office is projecting the U.S. to run $1 trillion deficits for each of the next four years. One alternative scenario projection has the U.S. with $2 trillion deficits by 2028.

– At the start of the Federal Reserve’s annual symposium in Jackson Hole, the Fed still had $4 trillion on its balance sheet. In last month’s meeting, the Fed decided to stay on course with the policy of raising interest rates, to which the White House objected. The federal funds rate today stands at 1.92 percent, and analysts expect another rate hike next month.

– Mexico’s chief negotiator in the NAFTA update is optimistic that he and his U.S. counterpart will soon have a deal. A successful NAFTA re-work is a top priority for Mexican president-elect Lopez Obrador, and President Trump wants to walk away with a win for the U.S. economy as well. Watchers expect a deal in the next couple days.

– Two-day talks between Chinese officials and the U.S. trade team led by Robert Lighthizer have failed to find a solution, and the Chinese don’t appear to desire another round of talks until after the November elections. The Chinese characterized the talks as “constructive” and “candid,” however, that does nothing to allay future rounds of tariffs.

These economic/financial briefs appear each morning in the Early Warning intelligence report. You can sign up for this email on your My Account page.



Mike Shelby is a former military intelligence NCO and contract intelligence analyst. He spent three years in Iraq and Afghanistan and is now the intelligence and warfare researcher at Forward Observer.

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