Appealing to Subway Riders – Weed Your Next Messiah, Weed for Rails

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Could Weed Save New York’s Awful Subways?

A new proposal called Weed for Rails thinks so.

On April 27, 2019 the L train in New York City will shut down for 15 months between Manhattan and Brooklyn to repair damage caused during Hurricane Sandy. Leading up to the closure, VICE will be providing relevant updates and proposals, as well as profiles of community members and businesses along the affected route in a series we’re calling Tunnel Vision. Read more about the project here.

After years of backpedaling and underinvestment, New York’s lawmakers are poised to enter 2019 sincerely convinced (finally) of two things: that the New York City subway system is deeply fucked, and that it will take a lot of money to fix it.

Alas, what has launched in recent weeks is a scramble of proposals—some old, some new—to pay for the billions of dollars that the MTA will need to merely get the subway system up to par with the rest of the world’s major transit networks. It’s probably the best chance America’s largest city has had in decades to get the infrastructure that it has long deserved.

In July 2017, journalist Aaron Short highlighted on this website one of those proposals: legalizing weed to help fix America’s infrastructure crisis. The places that have legalized, he wrote, have amassed millions of dollars in tax revenues, which has since been reverted to help pay for infrastructure in states like Washington and Colorado. New York—which has nearly quadruple the population of Colorado and an economy bigger than countries like Argentina and the Netherlands—could stand to benefit immensely from taxing pot, Short argued. So why not put it to the subways?

And that’s exactly what a growing chorus of elected officials in New York are now thinking.

Earlier this month, City Council Speaker Corey Johnson came out in support of legalizing the recreational use of marijuana, and using that tax revenue to help pay for the subway fixes. He promised to urge Albany—including Gov. Andrew Cuomo, who has softened his tone on the issue as other northeastern states have legalized—to act.

Joining Johnson, his predecessor, Melissa Mark-Viverito, has formally made the proposal—what she has titled ‘Weed for Rails’—a centerpiece of her candidacy for the city’s public advocate office, which will see a special election called in late February to fill the citywide seat. The former Council Speaker also sits on the MTA Sustainability Advisory Working Group, which is considering nearly a dozen potential revenue sources. And this is one of them.

VICE reached out to Mark-Viverito to find out more about the idea, and other potential ways to fund the city’s subways. (That includes Amazon.) Here’s what she had to say.

VICE: First off, what’s wrong with the New York City subway system?


Melissa Mark-Viverito: It’s in major crisis. It affects the quality of life for everyday New Yorkers, and it’s also affecting, obviously, the vitality of the city. When you talk about our mass transit system—which is the largest, and so important in getting New Yorkers around—between the buses and the subways, you hear people’s complaints of the commutes every single day. The delays; the lack of investment over years, and the infrastructure. Now, everything has just come together, and it’s this crisis. You know, ‘We haven’t updated the signals, so that’s the delays. The infrastructure is a mess.’ I was doing a meet and greet this morning underneath the 7 train, and that line is the number one complaint of those communities. If you see the videos, how horribly overcrowded they are. But it’s happening all over.

So it’s just a crisis, which I don’t think is getting the attention that it merits. We all know it’s broken. We all know it needs fixing. But I don’t hear people providing solutions. So utilizing the position of public advocate and this candidacy, I really want to champion that issue, bring the conversation to the forefront, and recommend some sort of policy solutions. And that’s where the Weed for Rails came about.

How would Weed for Rails work?


It’s about us saying, ‘This is a substantive source of revenue that a portion of it we can allocate to this critical infrastructure need, which impacts particularly low-income and working-class communities, who have limited options.’ If you got resources, you can call an Uber or Lyft every day to get you around. But if you’re somebody who relies on the transportation system, even though it’s still expensive for many, then you’re limited in your options. So this is impacting your ability to get to work on time. It’s impacting spending quality time with your family. If you get delayed to work, you could have an employer who doesn’t accommodate or be flexible, so it could impact your employment. It could impact the quality of life of your children, who have to wake up earlier to get to school because of it.

It’s a serious issue, and for me, saying, ‘Alright, I believe in legalization of marijuana—let’s legalize marijuana; second, that source of revenue, we’re going to apply some of it to the critical infrastructure needs of our transit system; and the remainder, we’ll invest and create opportunities in communities that have been overcriminalized and have been disproportionately impacted.’ [Another candidate for the office, Rafael Espinal, criticized the plan for not giving back enough to these communities.] That’s a concrete recommendation, and people are reacting to it. It’s obviously stirring up debate, and that’s what we need right now. We need to focus, and we need to take this to be the crisis that it is.

What do you think are the issues that led to this?

It’s always with infrastructure. It’s not just with our transit system, to be honest. It’s with our bridges, and in general, the lack of continued investment in the infrastructure of our city—NYCHA public housing is another example of that. So when you see that, over the years, it accumulates to a point where it’s not addressed and it becomes a crisis. And that’s the point where we find ourselves. So a historic disinvestment in that, and that’s basically what it is.

What do you think about other spending proposals on the table?

Obviously congestion pricing is something I support, and I’ve been a supporter of it strongly since 2008. And the fact that we haven’t passed that is ridiculous. But that revenue alone is a drop in the bucket in terms of the needs of the MTA. So the capital construction is where I’m talking about investing the money, but then there’s the operational side, which is a whole other set of conversations. That’s about pensions, management in general, and how the MTA functions. That’s a separate conversation. But my recommendation is specifically about investing in the infrastructure needs. When we talk about President Andy Byford’s Fast Forward Plan, he’s talking about uploading a lot of the capital infrastructure work. You know, bringing it closer—within 10 years, as opposed to 20 or 15 years. In doing that, you’re basically going to have front load, and put more money into that. To realize that plan, we need to invest heavily. So the gap is huge, and it’s billions of dollars that we’re talking about. Trying to at least address that plan, which is to bring the capital infrastructure up to speed, is where I’m focusing the plan on.

 

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Marijuana in New York – Kosher Cannabis – Not Part of this Article, But Likely For the Shelves

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Marijuana Gear for Discerning New Yorkers Is Flying off the Shelves

Higher Standards in Chelsea Market is breaking sales records this holiday season. How about a $6,000 glass pipe in the shape of a skateboard? 

 

Marijuana’s push into the mainstream now includes a store inside Manhattan’s Chelsea Market, where a holiday shopper seeking a gift for that cannabis connoisseur in their life can spend $6,000 on a glass pot pipe in the shape of a skateboard.

Higher Standards, a Miami-based company that makes marijuana accessories, launched its first retail location a year ago inside the high-end mall, which draws thousands of local foodies and tourists heading west to the High Line.

In addition to expensive bongs and vaporizers, there’s a selection of rolling papers, glass containers for matches and even a $350 marijuana infuser for the home chef looking to make edibles that are a bit more precise than dorm-room pot brownies. This is weed culture in 2018: upscale and out in the open—even in New York, where pot is still mostly illegal.

“There’s still a wink and nod in New York,” said Sasha Kadey, chief marketing officer and co-founder of Higher Standards. “There’s advantages in a business like ours, which doesn’t touch the plant.”

Kadey was referring to a dividing line in the cannabis industry between companies that “touch the plant,” or deal with marijuana directly, and those that don’t. The Higher Standards store in Chelsea Market set a single-day sales record on Black Friday, and then topped it on Dec. 8, the retailer said.

The store, which offers gift wrapping, of course, will be profitable this year, according to Kadey. The company plans to open as many as five additional locations next year, including one in Atlanta that’s expected to be ready just in time for Super Bowl Sunday.

A different kind of skateboard./Photographer: Gabby Jones/Bloomberg

Back in New York, with signs that Governor Andrew Cuomo, a Democrat, wants to legalize pot for adult recreational use, Higher Standards could be well-positioned to capitalize. MedMen, a U.S. cannabis company that has a medical-use dispensary on Manhattan’s Fifth Avenue, is reportedly interested in opening a new store a few steps from Chelsea Market.

These days, cannabis culture is becoming part of everyday life. Pot is now legal for adult use across Canada and in 10 U.S. states, with easing regulations driving an investment boom that’s seen the value of publicly traded marijuana companies surge. Still, federal laws barring marijuana possession have complicated matters.

 

Marijuana pipes and bongs have long been available across New York in bodegas and smoke shops, often with a requisite winking admonishment that the products are only for tobacco. Higher Standards, meanwhile, has sought to “elevate” the marijuana accessories shopping experience.

A wide selection of gifts for pot enthusiasts./ Photographer: Gabby Jones/Bloomberg

The retailer wanted to be in New York because the city is on the cutting edge of retail trends, Kadey said, adding that the company was also taking advantage of the surging curiosity around cannabis. In New York, everyone is hearing about weed and legalization, and the store has become a place to get a look at how the industry is evolving, he said.

To read the remainder of the article in Bloomburg, click here.

 

Michael Cohen, Hush Money and…

Michael Cohen: ‘Of course’ Trump knew hush-money payments were wrong

Michael Cohen: 'Of course' Trump knew hush-money payments were wrong

 

Michael Cohen exits the Daniel Patrick Moynihan Federal Courthouse on Wednesday in New York. (Alec Tabak / for New York Daily News)

Michael Cohen says “of course” President Trump was aware that hush-money payments to two women ahead of the 2016 election were wrong — and that the secret payments were arranged due to Trump’s election fears.

“Nothing at the Trump Organization was ever done unless it was run through Mr. Trump,” Trump’s former lawyer told ABC News’ George Stephanopoulos in his first interview since being sentenced Wednesday for a range of crimes.

 

Cohen has admitted to arranging the payments to buy the silence of porn actress Stormy Daniels and former Playboy model Karen McDougal in the run-up to the presidential election — and implicated the President in the process.

“He directed me to make the payments, he directed me to become involved in these matters,” he said Friday.

The 52-year-old “fixer” said his former mentor was “very concerned with how this would affect the election” if the alleged affairs came to light.

 

Cohen said he acted out of “blind loyalty” to Trump.

While prosecutors from the Southern District of New York have not charged Trump, they have made clear they believe Cohen’s claims that he worked “in coordination and at the direction” of the President to pay off McDougal and Daniels, who both claimed to have had trysts with the former reality TV host a decade earlier.

 

Trump is apparently referred to in court documents as “individual one.”

 

 

Cohen, 52, was given a three-year prison sentence Wednesday for a “veritable smorgasbord offraudulent conduct” that includes the hush-money payments as well as bank fraud, lying to Congress and tax evasion.

“I knew what I was doing was wrong,” Cohen told Stephanopoulos. “I stood up before the world and I accepted the responsibility for my actions.” Trump — who initially claimed he didn’t know about the payments and has denied the affairs — is now denying that they were campaign contributions and tweeted Thursday that he “never directed Michael Cohen to break the law.”

 

Cohen countered that claim.

 

“I don’t think there’s anybody that believes that. First of all, nothing at the Trump Organization was ever done unless it was run through Mr. Trump,” he said. “He directed me as I said in my allocution.”

 

The embattled barrister also said that special counsel Robert Mueller’s team — investigating the Trump campaign and administration’s Russia ties — possess a “substantial amount of information” that corroborates Cohen’s statements.

 

Cohen pleaded guilty to lying to Congress about his work on a possible Trump real estate project in Moscow and said he did so to be consistent with Trump’s “political messaging.”

 

Those charges were brought by Mueller’s office.

 

Investigators for the special counsel’s office also found that Cohen was in contact with a Russian national during the lead up to the 2016 election who offered to establish “political synergy” with Trump’s campaign.

 

The former fixer said he is continuing to cooperate with investigators.

On the same day that Cohen was sentenced, the Southern District of New York announced it had reached a non-prosecution deal with American Media Inc., the publisher of National Enquirer, in which AMI “admitted that it made the $150,000 payment in concert with (Trump’s) presidential campaign, and in order to ensure that (McDougal) did not publicize damaging allegations about the candidate before the 2016 presidential election.

To read the remainder of the article click here.

 

Israeli Charitable Giving is Down – Donate But Demand a Voice, Oversight and Accountability

GIVE TO ISRAEL, BUT DEMAND OVERSIGHT, DEMAND A VOICE AND DO NOT GIVE BLINDLY…

Dear Readers: 

Before you read further, consider this: we are strong believers in donating to causes in Israel. We are not advocating for discontinuing support. We are most certainly not advocating for boycotts, BDS or any anti-Israel measures (which ironically means we are suggesting you NOT give to anti-Zionist Jewish groups. The following article suggests that donations are down (see below):

https://theconversation.com/why-jewish-giving-to-israel-is-losing-ground-100946

We are suggesting that for every dollar donated to Israeli causes and foundations, it is difficult to tell how much of that money is being doled out to the intended recipients and beneficiaries. We are postulating that the oversight for many of these organizations is lax, at best, and if the billions of dollars donated to Israel made its way to the intended recipients, there would be far less poverty, far fewer homelessness and far greater political control.

The moral of this post is: choose your causes wisely. Make certain that they support the position you take in Israel. Make sure the senior executives do not earn outrageous sums of money each year. Don’t assume that the money you give is going to get to its intended recipient unless there is paperwork to document it. If you want to help Israel survive do not give to causes that support anti-Zionist organizations, even those that profess to be Jewish and philanthropic. And, finally, take the work “philanthropy” with a grain of Himalayan Pink Salt. It is a loaded word. 

We believe that, like the block voting group and donor religious organizations, it might be time for secular, conservative, moderate, non-Jews, Messianic Jews and others to take control of the narrative. Demand a voice as you hand over your money. 

Contact our gmail address: findinglostmessiah@gmail.com  if you have reviewed organizations and either found them to be less than stellar or if you have recommendations or questions. 

 

 

https://datawrapper.dwcdn.net/qx2xj/3/

Why Jewish giving to Israel is losing ground

American Jews donate at high levels to charity. One way they support causes in the U.S., Israel and other places is collective, often through large grant-making organizations.

In researching this organized philanthropy, I’ve observed that the proportion of Jewish institutional giving to Israeli causes has fallen since 2009. I believe that several factors, including demographic and social changes, a diminishing perception of Israel as being in need and concerns over the Palestinian-Israeli conflict have probably been driving this decline for years.

More recently, Israel’s increasingly conservative policies on social and religious issues, which are often at odds with what most American Jews support, might also be playing a role.

A tradition of support

American Jews proved a major source of philanthropic support for the Israeli state and Israeli society throughout the 20th century. A network of Jewish fundraising and advocacy groups have long organized collective donations and lobbying efforts.

These groups make major donations to large Israeli nonprofits, like the Jewish Agency for Israel and the Joint Distribution Committee, which then distribute them to smaller, local nonprofits.

However, knowledge about the actual scope of Jewish philanthropic contributions to Israel is limited. Data collected by my colleagues at Brandeis University indicate a steady increasefrom US$1.05 billion annually in 1975 to $2.05 billion in 2007 in real dollars.

And data from the Israeli Central Bureau of Statistics indicate that charitable gifts to organizations in Israel, from sources in the U.S. and other foreign countries, kept growing – rising from $1.95 billion in 2009 to $2.91 billion in 2015.

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R&R and Cops for Wingmen? Why Was the Nurse so Easily Wooed?

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De Blasio donor allegedly got an NYPD sergeant to chauffeur a nurse he was wooing

Lots of guys have a wingman — but when married mayoral donor Jeremy Reichberg tried to impress a lady, he had NYPD brass and a police chauffeur at his beck and call, according to court testimony Wednesday.

In 2014, Reichberg got a sergeant to drive her to and from a nail salon on Church Street in Brooklyn, Mt. Sinai-based registered nurse Tara Sheils told jurors at the NYPD bribery trial in federal court in Manhattan.

“I wanted to get a manicure and pedicure,” the flame-haired nurse told jurors, testifying for the prosecution against ex-NYPD Deputy Inspector James Grant, who allegedly pocketed bribes from Reichberg and Jona Rechnitz, a fellow donor to Mayor Bill de Blasio.

“He walked me in and said, ‘Take care of her,’ and told me to call when I was done and he would pick me up,” at the salon, Sheils said of her personal police driver, whom she remembered only as “Sgt. Adriano.”

The nurse first met Reichberg when he was hospitalized for emergency gallbladder surgery — during which time an NYPD officer guarded Reichberg’s hospital door, an honor normally reserved for injured cops.

Reichberg and Sheils’ relationship was first revealed in November.

Sheils didn’t ‘fess up to an actual affair with Reichberg. But when Assistant US Attorney Kimberly Ravener asked, “Did your relationship turn flirtatious?,” she answered, “Yes.”

As part of his flirtations, Reichberg arranged for Sheils to enjoy an NYPD promotion ceremony at police headquarters, where she was given a personal tour and then invited into the offices of convicted ex-NYPD Deputy Chief Michael Harrington and ex-Chief of Department Philip Banks. Reichberg had already given her Harrington’s cellphone number — with instructions to call if she needed anything, she testified.

Harrington has been sentenced to two years’ probation in the corruption probe.

Egypt, Israel, Cyprus, Noble-Delek and Dolphinus Holidngs

East Med rides the waves

Egypt, Israel and Cyprus all saw progress in their ambitions to develop the prodigious East Med basin in 2018

The one-time backwater that was the East Med continued its transformation into one of the world’s most prospective natural gas areas in 2018, with Egypt pushing the envelope through major projects and Israel also looking to get in on the act with a bold plan to send gas to its neighbour—and one-time supplier—Egypt.

Italy’s Eni, which discovered the giant Zohr field, which contains some 30 tr cf of gas, was reported earlier in the year to be preparing to carry out exploratory drilling at the Noor field, off Sinai, amid speculation that another Zohr-size discovery was in the offing.

Interest in Egypt piqued as a result of the increasingly attractive terms on offer to international firms. This helped smooth the way for a deal that could see gas from Israel’s giant Leviathan (21tr cf of producible gas) and Tamar (10tr cf) offshore fields reaching Egypt. Noble Energy and Israel’s Delek, operators of the two fields, signed an agreement in principle with private buyers in Egypt in 2018 to supply 226bn cf of gas over a 10-year period.

In February, Noble and its partners reached a deal with Egypt’s Dolphinus Holdings, a group of private sector companies, to sell gas from offshore Israel to Egypt. Though politically risky for Egypt, where dealings with Israel have historically been taboo, this has the backing of the Egyptian government and after years of halting progress, this now looks to be a game changer for the region.

Egypt saw some production developments in 2018. In August, SDX Energy announced that a successful production test had been conducted at its SD-3X appraisal well at South Disouq, Egypt. The well flowed at a maximum rate of 16.1mn cf/d during an 8-hr clean-up period.

In September, production capacity at Eni’s Zohr project, developed in conjunction with Russia’s RosneftBP and the UAE’s Mubadala, together with Egyptian companies, was increased more than 25pc to greater than 2bn cf/d. The increase was achieved through the commissioning of the fifth gas train at the site, as well as start-up of the second export pipeline and new wells. The field is expected to reach production capacity of 2.7bn cf/d by the end of 2019. During first-half 2018, 109.5bn cf of gas were produced at the field.

Greece’s Energean was meanwhile developing Israel’s Karish and Tanin fields, where 2.4tr cf of gas had been discovered but not developed. The Greek firm has concluded agreements with private Israeli power producers for the supply of a total of 148bn cf a year for 15 years. First gas is expected in 2021.

The year started on a strong footing when Eni and Total announced yet another gas discovery in the Eastern Mediterranean in February, located off the coast of Cyprus. The “Calypso 1” well suggests an extension of the Zohr like play, according to Eni—which was also active in Lebanon, where it signed deals to explore off the country’s coast.

Lebanon’s involvement is still low key, and it is held back by difficult geopolitics—traditionally the bane of the East Med’s development prospects. Antipathy between governments in the region could deter drilling. Turkish warships reportedly stopped Eni from drilling in Cypriot waters in February due to its non-recognition of the Greek Cypriot government. Lebanon and Israel have yet to reach agreement over the maritime border area, with some of Lebanon’s offshore blocks deemed by Israel to encroach into their maritime zone.

To read the complete article click here.

An Oily Business… Conflicting Reports in 2010-2013 – Shemen Oil, Yam 3, Shareholder Value, Geopolitical Implications and Politics – Part I

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SHEMEN OIL AND GAS EXPLORATIONS, LTD. HISTORY AND MAJOR EVENTS 2010-2013

 

Shemen Oil and Gas Explorations, Ltd. (SOG) was established in 2010 for the purpose of oil and gas exploration and drilling. What makes this company so interesting is its current interests in the Noble-Delek Gas deal and its history with the Yam 3 well. Yam 3 was in September of 2013 a billion-dollar producer, a unicorn laying wait off the coast of Ashdod, and only a month later, a desert, an abandoned hole barren of any possibility of production.

But what happened between 2010 and 2013? And, did the current holders of Shemen know then that they would be getting a deeply discounted piece of a far greater deal now? We are of the opinion based upon significant research, that the history of Shemen and the Yam 3 well is a story of prior knowledge, inside information, stock manipulation, price pumping and dumping, bartering property interests for money and clout, bargaining favors in exchange for patronage with Israeli top government officials, tax schemes, money laundering, and geopolitical maneuvering.

We make no outright accusations; but place the burden of clarity upon certain obvious principles in front of you; and we ask that you follow our connections. As more information comes in, we will update accordingly. This is Part I.

For the purposes of reading and analysis, dear readers, we have provided you with all of the research (well, almost all). In the interest of prudence, we are leaving out the connections to Russia, Azerbaijan and players in the Middle East, each of which is a chapter within the greater story. We are also leaving out a separate story regarding related indictments, which is relevant given the nature of those indictments.

The story begins not with the incorporation of Shemen in 2010, but with Gabi Ashkenazi who was brought on board with Jackie Ben Zaken and his partners in 2011 to act as a face for negotiation for the rights to drill for natural gas in a well referred to as Yam 3. It sits off the coast of Ashkelon. Ben-Zaken had money, a company Financial Levers, Inc. “Levers”, stature and Ashkenazi, was a political and military powerhouse, a former IDF official with connections and credibility, each characteristic necessary to negotiate for drilling permits and licenses.

Some articles at the time hint that the public offering would not have been possible were it not to have been for his face or one of equal value and stature as the front man for the company. 

We are guessing that, even as early as 2011, the people with the pitchbooks knew that Yam 3 was going to be deserted of any oil or gas; and they led shareholders and public investors to believe that they had found a goldmine (sorry, an oil and gas well) when they knew otherwise. Alternatively, we believe that there was significant market manipulation at the time, with respect to Shemen Oil and Yam 3. 

The shareholders would buy and sell shares with the ebbs and flow of the oil announcement tide, quite literally. A careful review of share prices, the influx and outflow of money was carefully timed. Haim Leibovitz so much as sold his stake in the company at the behest of his Rabbi, but that is a story for another day. One must wonder if that sale, closing on a deep discount was clearly understood for its magnitude. It involved his own company, a tax free entity in Burkina Faso. 

However, in the background of this entire picture was a another set of deals being negotiated, the deals involved the Leviathan and Tamar wells, a monster of a lucrative prospect, now known as Noble-Delek. Whatever happened with Yam 3 was, in our view, largely irrelevant so long as the parties involved could find their way into Noble-Delek deal which it had always been assumed (and rightfully so) would yield billions.

Returning to the Yam 3 foreground, what a financial analysis in a vacuum does not consider is the geopolitical aspects of oil and gas as it applied to Israel and its place in Middle East politics. Premature announcements regarding gas and oil which were made, in our view were timed to provide Israel with the appearance of financial strength to Hamas and other organizations trying to claim disenfranchisement. They were also well timed to stabilize or destabilize the Israeli Knesset, at will. Whether there was political intervention in the timing of the decisions is a question we do not address. We leave that one open for journalists and investigators to examine.

It is important to understand that each announcement to the public both in Israel and abroad changed the tide of the political landscape in Israel and for Israel. The ramifications in September of 2013 of oil and gas certainty and then the follow-up announcements only weeks later of a dry well were not only felt on the stock market but within the political stratosphere of Israeli/Palestinian politics. 

And then there’s the timing of changes within the religious landscape that cannot be overlooked or understated. The ultra-Orthodox connection to the Noble-Delek deal lies with Haim Leibovitz (a/k/a Chaim Leibovitz, a/k/a Chaim Lebovitz) whose Rabbi had the power to influence his financial stake to the extent of many millions simply by insisting that he sell out because the company drills on Shabbat. We believe that to have been a ruse, very cleverly initiated both for his community and for his pocket. We do not claim there was anything illegal in the sale, only that there are some aspects that seem somewhat eyebrow-raising.

It was quoted in the papers that he was blessed, for if he had not sold he would have lost millions. That is an absurdity beyond all reason. Leibovitz is a savvy businessman as were his partners in all areas of investing. They are not fools and many of the projects these men hold interests in are living, breathing and working on Shabbat. Whether or not he sold knowing that the wells were dry is a question that remains open. That he sold within companies in which or to which he had interests is public knowledge. 

He was an insider (as was likely his rabbi and confidant). Any knowledge of the status of the Yam 3 well beyond what was publicly known, and any move made to divest himself of his shares as a result of or a reaction to that knowledge is not a blessing, and in our view raises questions. In addition, the accounting, net operating losses, sales between companies, share price, are all things interesting enough to demand a deeper dive, in our opinion.

Then there were other parties, controlling stakeholders, who were also ultra-Orthodox.  These parties got into the deal so Shemen could diversify the investor pool in the eyes of the Israeli government. They were strategic partners, but investor information lists them as controlling shareholders. This is interesting given the size of their holdings, the rate at which they took an interest, the timing as it coincided with changes to Haim Leibovitz’s holdings and the exchange of property interests which seemed also to coincide with the diversification.

While that piece will not be covered here directly, we will revert back to this article when we publish that later.

For the purposes of this article, we are focusing on the company, the oil and the share price of Shemen between 2010 and late 2013.

Suffice it to say, those who bought on the cheap when Yam 3 abandoned as nothing more than a giant hole in the sea;  and who held onto those shares in advance of the Noble-Delek deal (which has been negotiated since some time in 2012) have made a killing. 

We have highlighted key points below in red.

HISTORY, INFUSION OF CAPITAL AND SHARE PRICES:

“In November [2011], the company hired former IDF chief of staff Lt.-Gen. Gabi Ashkenazi as its chairman. A month later, it raised NIS 120 million in its IPO . Gabi Ashkenazi’s involvement was key, it would seem to strategically convincing the appropriate government officials to permit the drilling rights, which were being heavily negotiated.

In February of 2012, Shemen Oil announced that it  had hired a rig from Atwood Oceanics Worldwide Ltd. and was in negotiations to obtain the necessary licenses to drill the Yam 3 well. The announcement of the rig pre-empted, it would seem, the reality of whether or not drilling rights were going to be given. Regardless, at the heals of that announcement the share price went up about .5% to a market cap of about NIS 631 Million.

In July of 2012, Shemen Oil, Inc. announced that it had been given the licenses necessary to begin drilling the Yam 3 well, at an estimated cost of $98M USD, raising its share price about 17% on trading. This announcement at the heals of the previous February accouncement set the stage for excitement; but also created what would have been a public relations nightmare if the government had found reason to deny the drilling permits. 

In May of 2013 the Israeli newspapers ran articles of a new oil find, coincidentally – or not so, Yam 3, a well we knew from previous announcements off the coast of Ashdod in Israel. If proven correct, by all estimates, Yam 3 had the potential to tip the balance of power in the middle east and present challenges for an already fragile quasi peace between Hamas and the Palestinian Authority and Israel. The estimates, depending upon the depth of the well and the thickness and type of the surrounding rock, predicted a well that could generate potentially 128 million barrels of oil.

According to reports, the rights to the well were purchased from Shemen by an Azerbaini company, Caspian Drilling, Ltd.. Under the terms of the agreement, there was an exchange of the responsibility of the drilling costs for a percentage of whatever oil was found. Further, under the terms of the exchange, Caspian paid Shemen $2,000,000.

 

THE CRITICAL ANNOUNCEMENTS, MANIPULATION OF MARKETS, GOVERNMENT STABILITY AND GEOPOLITICAL FACTORS:

There were 4 major announcements regarding the Yam 3 well that were critical in regards to share prices, investor money, geopolitical changes and strategic alliances which were being created as the rest was happening:

The first was the introduction of Gabi Ashkenzi into the picture for “strategic purposes.” While we think this was not-so-subtle code for knowing whose palms to grease, we make no accusations. It was most certainly an unveiled announcement that he was the right person for the job. At the time of that announcement, Shemen had been controlled by Jackie Ben-Zaken, both individually and through a company call Levers, Haim Leibovich (a/k/a Chaim Leibovitz, a/k/a Chaim Lebovitz) and Avrahan Nanikashvili.

In Israel it is not always what you know but who you know and Gabi Ashkenazi was a key player in the Department of Defense and the other ministries whose approvals were required to obtain unfettered access (a/k/a drilling rights) to Yam3. In our Opinion, it also gave him and the company’s principals access to the people in power whose ears would be required to make them a lot of money later, regardless of the success or failure of Yam 3 (think Noble Delek).

The Gabi Ashkenazi announcement also paved the way for a Shemen IPO which brought public money into the deal: “includ[ing] Migdal Insurance and Financial Holdings Ltd.(TASE: MGDL), The Phoenix Holdings Ltd.(TASE: PHOE1;PHOE5), Menorah Mivtachim Holdings Ltd. (TASE: MORA), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and IBI Investment House Ltd. (TASE:IBI)”.

The second major announcement was a three-stage set: first, the hiring of a rig, the second was then solidification of the drilling rights and the third was another announcement regarding hiring of  another rig. These three public statements were made between July and September of 2012 and with them the shares of Shemen soared, increasing market cap and interest in the company.

In addition, the geopolitical landscape at the time (which will not be looked at in depth for these purposes) began to change as Israel’s stature in the Middle East was guaranteed to change significantly if it became a natural gas powerhouse and/or a natural gas and oil hub.

The third major announcement was made in and around September 8, 2013, when it was announced in GLOBES that Oil was found at Yam 3. To be clear, this was in addition to the natural gas that had been previously announced in 2012 and had been the basis for the initial drilling rights. 

While Globes also published caveats in the articles announcing Shemen’s find,  which included the possibility that an announcement of the magnitude of Shemen’s estimates was a bit premature because it did not include the depth and type of rock surrounding the well (which could have made drilling impossible), the shares of Shemen Oil on the Tel Aviv stock exchange soared about 28% on the news closing around 15% higher from the open that day. 

A key comment in that Globes article was the following statement: “Hamas and its rival Fatah movement likely would be at each other’s throats, literally, to claim that Israel is “stealing” the reserves from them.”

The final set of announcements occurred in October of 2013, to be clear only a month later, when it was announced that the Yam 3 well was dry, bone dry. It was wholly and completely devoid of oil. What made this announcement so significant is the need to suspend rationality if you are to believe that the numbers being described in the surveys surrounding each announcement were staggering (and drove the markets upward) and suddenly, nothing. It is simply illogical.

The shares tanked when reports starting coming out in a flurry that Yam 3 was a desert, losing somewhere between 60 and 80% of the market value by the end of trading. Ben Zaken, in what appeared to be an act of altruism bought back many of the shares at what was then deemed to be a significant loss. But really? If Ben Zaken had any knowledge that Nobel-Delek was going to be actualized, he had just made a killing, capitalizing on losses that he must have seen were coming long beforehand. Falling on his sword in an act of altruism and scooping up shares of a company that would be far more valuable, was a clever play, in our view.

The ultra-Orthodox who came into the deal at about the same time that Haim Leibovitz’s rabbi was giving him sage advice, came in on a minority position with a controlling interest, at a discount. They were needed to diversify the shareholders thereby meeting requirements set forth by the government before it would provide the licenses and certifications necessary to drill.

We believe that behind closed doors, many of the parties – the closely held insiders – who on their face lost money, gained something more valuable, rights to Nobel-Delek.

The people who were most hurt by the events that transpired between 2011 and 2013/2014 were public shareholders who relied on the promises of the corporate announcements and their legitimacy. They were duped. The shareholders who have since held on, thus gaining a share albeit – fairly small in Nobel, were lucky. The ones who still own a significant stake in Shemen have a very lucrative, if on not somewhat oily future ahead. 

We intend for this to be an ongoing investigation. We will make corrections as necessary. This should not be deemed in any way, shape or form to be advice to any investors in Nobel as they are currently traded or any private shareholders who may own other equity or interests. This is purely an opinion article, based upon our analysis of facts as laid out in the news articles, shareholder filings and other information, our analysis of due diligence. 

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