Mr. Dow 1000

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A good jingle can sell a radio program, and "Radio Free Wall Street," broadcast locally early Sunday mornings on WABC 770 at 1:00, just might have the nation’s best jingle. The opening looped arpeggios of "Secret Agent Man" are hardly given the chance to register before a narrator comes on: "From an undisclosed location somewhere in the Northern Hemisphere, it’s everything Wall Street doesn’t want you to know…"

Now the singing has started: "There’s a man who lives a life of danger…" Interspersed with the music, in a voice pitched right between Howard Stern and Rush Limbaugh, with better timing than either, the opening barbs are thrown. "How come Wall Streeters aren’t running for their lives?... Why is no one talking about the eight trillion dollars they wiped out?"

"Secret Agent Man…"

This is Nicholas A. Guarino Jr., better know to his audience as "maverick international financial analyst Nick Guarino," publisher of the Wall Street Underground newsletter, former foil of Bill Clinton, convicted federal criminal, and recent defendant in a civil action brought forth by the U.S. Commodity Futures Trading Commission.

Guarino has been portending the collapse of Wall Street for more than a decade, most recently calling this summer’s rally "stok[ing] the coals" and "a mighty bull that’s now a steer [that] kind of lost his manhood." He is a perma-bear, down on the market through the late 90s and I-told-you-so gleeful since 2000, when major losses let him forgo the word "crash" and use his preferred term: "wipeout." Mr. Guarino has a fondness for the sweeping doomsday statement.

"The stock market’s been wiping people out for centuries, okay," he said on his May 26, 2003 "Radio Free Wall Street" broadcast, archived with all the rest at "Every single one of the great bull markets that they’ve had in stock market wonderland has always ended up in a bear-market bust, and get this: a Great Depression… [T]he ‘deflation’ word [is] the buzzword for depression. The U.S. economy is going into a 1930s-style depression. We’re talking bread lines, soup kitchens, selling apples on street corners and a wipeout of untold proportions."

According to Guarino, his speculation will become truth by autumn–"by the time the leaves start turning in Central Park"–at which point a final, critical piece of the U.S. economy will go bust: real estate (more on that later). He also says that simply by revealing this information, he is putting himself in mortal danger, which is why he must continue to broadcast from his Cheneyan "location" and communicate with his underlings via scrambled satellite phone.

Citing these concerns, his "staff"–an outsource located in England–repeatedly dodged interview requests.

Americans are in a record amount of debt, as is the U.S. government–an all-time world record, in fact. The predicted recovery in corporate earnings has yet to materialize, and unemployment is at a 9-year high. Home foreclosures and personal bankruptcies are reaching record highs, while interest rates are at their lowest in a generation. Every large state is broke–California is double-broke–while cuts in federal taxes are being offset by hikes in state and local taxes.

These are the signs of fiscal apocalypse regularly given airtime by Guarino, and they’re largely true–no matter how extreme they may sound in his delivery. Also accompanying Guarino’s analysis and advice is a criminal past and a long history of fleecing customers in the under regulated world of small-scale Wall Street newsletters.

The number of independently published stock- and futures-picking financial rags skyrocketed in the 90s, alongside broker-free online investing, according to the Commodity Futures Trading Commission, the government agency currently attempting to bring Guarino to task. Publications such as Louis Rukeyser’s tony Wall Street (est. 1992) and Wall Street City Pro’s Wall Street Digest (est. 1996) spent the last decade charging high subscription rates–in some cases, thousands of dollars–to those interested in alleged insider information on the markets.

"These sorts of things [newsletters] come up on a daily basis," says Rocell Cyrus in the Chicago regional office of the Commodity Futures Trading Commission. "I couldn’t give you a figure of how many people are making recommendations."

No single organization regulates these newsletters, so charges of fraud can be filed by different agencies. In Guarino’s case, since his Wall Street Underground came with a trading system that recommended futures, the CFTC filed charges last April. For the most part, the newsletters are watched over by a confusing juncture of the Better Business Bureau, the U.S. Postal Inspection Service ("[T]hat would fall under the mail fraud statutes," says David Ng, New York Postal Inspector), the aforementioned CFTC, and the SEC, through its self-regulatory arm. No one is directly responsible for overseeing claims made in newsletters–let alone websites, chat rooms, and message boards–except for the customers themselves, once they get screwed.

Guarino came under investigation because he was selling information on exactly when to buy specific futures and accompanying it with outrageous claims: He once guaranteed $1 million returns with false money-back promises. With more than $5 million from his 1000-plus Wall Street Underground subscribers, he started filling up the banks of the Cayman Islands.

In what seems to be questionable judgment, Guarino wears his criminality on his sleeve: "Will the nutcase, the criminal rogue of Wall Street–that’s me–be allowed to continue to air his prophecies of doom and gloom and poison the Wall Street investors’ minds against the greatest hustle in history?" During one broadcast, he claims to have "been fighting the Wall Street establishment for 20 years," who "hate [his] guts." The establishment has "tried to run [him] out of business." He’s been "criminalized."

Guarino’s "criminalization" has a long history. According to the charges filed against him in April, he was registered with the National Futures Association, the CFTC’s self-regulatory agency, in 1984. He had his own company at that time, H.G.S.E Commodities, Inc., and was a certified commodity trading advisor until 1986. He operated out of Arkansas (and still uses the Midwest as a home base).

At some point, Guarino began to commit mail and wire fraud, using a scheme to sell investors on gold and silver. On March 24, 1992, he was convicted by the U.S. District Court for the Western District of Arkansas and sent to federal prison. According to an April 22, 2003 filing by the CFTC, he also was ordered to pay the government $1,250,678–a fine that remains uncollected.

In the early 90s, the machinations of then-governor Bill Clinton captured Guarino’s fancy, leading to eight-page, single-spaced public letters in which the recent ex-con called Whitewater a "pure hustle" and asked like-minded citizens to send him money–"no credit cards"–to fight Clinton. His book, The Impeached President (a prescient title if ever there was one), accused Clinton of drug running, beatings, arson, airliner sabotage, rape, and 56 or so murders.

Then, in the mid- to late 90s, Guarino entered a new line of business, once again operating out of the middle of the country. He began Carnival Brands Seafood Company, intending to sell microwaveable seafood meals. At the International Boston Seafood Show in March 1997, the new fishmonger presented a product to a reporter from Quick Frozen Foods International with that catchy 100 percent money-back guarantee. He later sued another Carnival foods company, Carnival Brands, Inc. of Louisiana, for trademark infringement, although the defendant was incorporated in 1990–six years before Guarino’s company. The Eleventh Circuit U.S. Court of Appeals found for the other Carnival seafood company on September 3, 1999.

These days, Guarino has a $100 million federal agency and its own enforcement officers taking him and his associates to court. The CFTC has revealed his "undisclosed location" to be Merriam, KS, and has painted Guarino’s offenses in the sort of black-and-white paints he proudly employs on his radio show. According to the CFTC, Guarino and his associates have "fraudulently overstated the profit potential of the trading systems…omitted material facts about Guarino’s criminal background and history of fraudulent conduct, and made false money-back guarantees."

But Nick Guarino has one ace up his sleeve: His operation is in Merriam, KS but his own whereabouts are unknown.

"We are still in the process of seeking to serve Mr. Guarino," says Rocell Cyrus of the CFTC. "I did get the order from the judge regarding the preliminary injunction hearing and the judge did find in favor of us, the plaintiff... The judge enjoined the defendants from further practices and actions of distributing or advertising or marketing the Wall Street Underground products to the public, so there is a preliminary injunction in place." However, remains in operation, offering its archive of Nick Guarino’s financial radio broadcasts and his calls to "join the underground."

That preliminary injunction, when decided upon, could stop from posting Guarino’s radio rants. In the meantime, the "criminal rogue of Wall Street" is still out there broadcasting.

"That’s right, do you realize you’re listening to a criminal broadcast?" Guarino asked on May 19.

"This is the forbidden broadcast. You might want to ask why. Well, I’m a criminal, and Wall Street will be sure to tell you about that. But what they’ll forget to mention to you is that criminals have made a lot of people very wealthy. And I’ve helped millions of people just like you get out of the Wall Street clutches… Now you better believe that really chaps Wall Street’s butt."

Guarino predicts a bear market the likes of which we have never seen–Dow 1000, NASDAQ 100–and a depression that’s been setting in for years. His proclamations are so repetitive and so harsh that, coming at such a period of economic uncertainty, it’s not hard to imagine frightened investors sending him money. Looking beyond the issue of fiscal responsibility, however, his comments can also be appreciated as enormously entertaining, thought-provoking contrarian rants–available 24/7 on the Web:

"The U.S. consumer, which is 70 percent of the U.S. economy, has run out of money to beg, borrow or steal.

"You’ve been screwed, blued and tattooed, rode hard, put away wet…

"Oh, by the way, refinance your house, take out the equity, and go buy some plastic junk from Taiwan… See, you’re being set up for the kill."

Guarino’s current argument, repeated for the last three months, is that after toppling the stock market, the caretakers of "the Wall Street poop chute" will go after your home. Market rallies are just temporary flourishes designed to get you to throw more money at stocks, which will lead to the looming real estate crash.

"The only thing that has saved the U.S. economy over the last two years from a full-blown, in-your-face depression…is the fact that trillions of dollars have been put into the U.S. economy by mortgage refinancing," he says.

The International Monetary Fund predicted a 40 percent chance for a real estate bubble, with the current run-up in the market the largest since 1970. Ronald E. Roel of Newsday acknowledges that low interest rates and a torrent of mortgage money are keeping the market going.

Guarino predicts a real estate fire sale that will feature mansions selling for pennies on the dollar. To prepare, everyone should get out of debt and start renting. Keep your money in cold, hard cash and take charge when everything goes wrong:

"Buckle your seatbelt, prepare for airbag deployment, wait two years and this wipeout will be as obvious as the stock market wipeout and you will be rewarded for the cash you save."

Guarino’s appeal lies in the fact that no one wants to know what’s happening on Wall Street these days. Another accounting scandal or another earnings disappointment. The man who seems like a safe bet, the one who made $5 million off his readership–and that’s only what the government knows about–is a self-described "old man" who doesn’t seem to shave or shower, and who dispenses advice from a hole in the ground.

But what is he really looking for? His track record does suggest money to be his primary goal, but his advocacy and near-religious fervor against Wall Street seem to hint at other intentions:

"I hate Wall Street. I got it in for them…I’ve seen many people close to me wiped out in these Wall Street little scandals, okay. I’ve seen many people’s lives destroyed by Wall Street and I don’t like it. I have got a bone to pick."

Clearly, he relishes his role as a perma-bear, an underdog, a creature apart from the Wall Street insiders. He’s the self-proclaimed recession messiah. And like Gray’s Papaya’s "Recession Special," if you advocate something for long enough, it will eventually become true.

In many ways, Guarino is an exemplary stock-market figure for our times, much like James J. Cramer in the late 90s. But Cramer was and remains a disgusting individual: all arrogance, obviously out to make as much for himself as possible, but willing to bring you along for the right price. From his sharp suits to his goatee to the fact that he pushed Internet stocks while starting his own Internet stock to push Internet stocks, he was an insider, a guy who knew what was going on.

The thing is, both Cramer and Guarino seem to have some truth in them. Their rhetoric is clearly inflated, but by putting scruples aside, perhaps one could make some money. That’s why it’s hard to listen to that "Secret Agent Man" music and not get caught up in a Wall Street Underground of your own. Nick Guarino is a criminal, but really, in finance these days, who isn’t?

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