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Thompson 
Easton man accused of stealing $7M via fake Bacon' transactions 
Lehigh Valley Live 
By Sarah Cassi 
7/30/19 
An Easton man who headed a cryptocurrency escrow company was arrested last week on federal charges he 
allegedly stole $7 million from two companies by lying about Bitcoin transactions. 
Jon Barry Thompson, also known as J. Barry Thompson, was the principal of Volantis, which included a 
cryptocurrency escrow company called Volantis Escrow Platform LLC and a related company, Volantis Market 
Making LCC. 
The 48-year-old Thompson was arrested in Easton, and was charged with two counts each of commodities fraud 
and wire fraud. Easton police assisted in serving the arrest warrant at 6:15 a.m. Thursday at Thompson's West 
Burke Street home on College Hill. 
What happens to the money when a criminal's stash is in bitcoin? 
When a criminal's stash is in bitcoin, the stakes are now much higher in forfeiture cases with the soaring value 
of the virtual currency. 
Thompson was released after posting $500,000 bond. Messages left for comment at a phone number listed for 
Thompson and for his defense attorney, Matthew Siembieda, were not immediately returned. 
Prosecutors said Thompson stole $7 million from two companies after lying about transactions of the peer-to-
peer digital currency Bitcoin 
$3 million from one company and $4 million from a second. 
Thompson offered minimized settlement default risk in cryptocurrency transactions, and claimed there was no 
risk of default, prosecutors allege. 
In June and July 2018, Thompson convinced the first company to send Volantis more than $3 million for a 
Bitcoin purchase, prosecutors allege. Thompson allegedly assured the company he had the Bitcoin in hand and 
that money could not be lost. 
Thompson took the money, but never provided the company the promised Bitcoin or returned its money, 
prosecutors said. 
Thompson allegedly gave the company a fake account statement showing he had the company's money but in 
reality sent the more than $3 million to a third-party entity purportedly in exchange for Bitcoin without first 
receiving any of the Bitcoin in hand. 
In July 2018, Thompson allegedly convinced a second company to send Volantis more than $4 million for 
Bitcoin purchases. Again, Thompson is accused of sending a substantial portion of the money to a third party 
without first receiving any Bitcoin in return, prosecutors allege. 
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Thompson never gave the second company any Bitcoin and did not return its money, prosecutors said. 
"Jon Thompson induced investors to engage in cryptocurrency transactions through his company, Volantis 
Market Making, by touting a transaction structure that would eliminate any risk of loss during the purchase," 
Manhattan U.S. Attorney Geoffrey S. Berman said in a news release. "As his clients soon realized, however, 
Thompson's representations were false, and these cryptocurrency investors ultimately lost all of the money they 
had entrusted with him because of his lies." 
FBI Assistant Director-in-Charge Sweeney said Thompson used phrases and terminology that the victimized 
companies didn't understand, and he "allegedly preyed on their ignorance of the emerging cryptocurrency." 
"Thompson allegedly thought no one would ask where their actual money went when they trusted him to invest 
in Bitcoin," Sweeney said. 
The complaint doesn't identify the companies allegedly victimized by Thompson. 
Forbes previously reported Symphony, an Irish investment company that specializes in trading 
cryptocurrencies, gave Thompson 3.6 million Euros to purchase Bitcoin on its behalf. 
Symphony never received any Bitcoin and its money was never returned. 
In that case, the plaintiff withdrew the complaint it had brought in federal court in Pennsylvania and, instead, 
reached a private settlement with Thompson. Thompson then breached the agreement by failing to make the 
first settlement payment, Forbes reported. 
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Pinto-Thomaz 
Popular Paint Brand Insider Trading Results In Prison Term: Feds 
Patch 
By Chris Dehnel 
7/30/19 
A former analyst for a major financial ratings agency is to spend more than a year in prison for an insider 
trading scheme involving his hairdresser, a jeweler and two major paint brands sold prominently in Connecticut. 
Geoffrey S. Berman, the United States Attorney for the southern district of New York, announced that 
Sebastian Pinto-Thomaz, 34, a former credit ratings analyst at Standard & Poor's, was sentenced in Manhattan 
federal court to 14 months in prison for participating in two schemes to trade on material, nonpublic information 
in advance of the Sherwin-Williams Company's acquisition of the Valspar Corporation. 
Valspar is the brand sold by Lowe's. 
Pinto-Thomaz was convicted on April 26, following a jury trial before U.S. District Judge Jed S. Rakoff, who 
also imposed Monday's sentence. 
In summarizing the case, Berman said, "As an employee of Standard & Poor's, Sebastian Pinto-Thomaz was 
privy to potentially lucrative information about business acquisition plans. Instead of protecting that 
information, as he had sworn to do, he shared it with a friend and with his hairdresser. In turn, they bet on a 
stock that they knew to be a sure thing, and raked in nearly $300,000 in profits. Pinto-Thomaz painted himself 
into a corner when he and his co-defendants exploited insider information to reap illegal profits. Now they all 
face time in prison for their misdeeds." 
When a company announces an acquisition, the acquiring company often seeks the opinion of a credit rating 
agency regarding the potential impact that the acquisition could have on the acquiring company's 
creditworthiness, Berman said. Therefore, companies often contact rating agencies before an acquisition is 
publicly announced in order to secure the rating agency's views on how a possible acquisition could impact a 
company's credit rating, he said. 
All major rating agencies offer a service — sometimes known as a Rating Evaluation Service, or RES — that 
provides the company with a rating committee decision with respect to a proposed acquisition. 
In March 2016, Standard and Poor's, a credit rating agency in New York, assigned Pinto-Thomazto work on a 
RES for the Sherwin-Williams Company in advance of its contemplated but unannounced acquisition of the 
Valspar Corporation, according to casae records. 
In connection with the assignment, Pinto-Thomaz received material, nonpublic or "inside" information the deal 
about Sherwin-Williams's planned acquisition of Valspar prior to the public announcement of the acquisition. 
S&P's written policies prohibited the unauthorized disclosure of confidential information, which included the 
inside information, Berman said. 
During his tenure at S&P, Pinto-Thomaz reviewed and certified his duties of loyalty and confidentiality to S&P 
and its clients, according to case records. 
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In March 2016, Pinto-Thomaz passed the inside information about the paint merger to Jeremy Millul, a friend, 
and to Abell Oujaddou, his hairdresser, so that they could "use it to make profitable trades in Valspar stock and 
options.," Berman said. 
On March 21, 2016, the first trading day after the public announcement of the acquisition, the price of Valspar 
stock increased approximately 23 percent over the prior day's close. 
Millul, a Manhattan jeweler opened a brokerage account on March 13, 2016, and shortly thereafter purchased 
480 shares of Valspar common stock, case records show. On March 18, 2016, the last trading day before the 
acquisition was publicly announced, Millul also purchased 75 out-of-the-money Valspar call options, according 
to case records. 
After the acquisition was publicly announced, Millul sold his Valspar stock and options for approximately 
$106,806 in profits, Berman said. 
Oujaddou, a Manhattan hairstylist and salon owner who has known Pinto-Thomaz for years and is a close friend 
with his mother, was given inside information during a haircut on March 8 or 9, 2016, according to case 
records. On March 10 through March 18, 2016, Oujaddou, who had never previously purchased Valspar or 
Sherwin-Williams purchased 8,630 shares of Valspar stock, case records show. 
After the acquisition was publicly announced, Oujaddou sold his Valspar shares for approximately $192,080 in 
profits, according to case records. 
Following the trading, Oujaddou met Pinto-Thomaz in the paint aisle of a hardware store and paid him a 
kickback, Berman said. 
Pinto-Thomaz denied having a relationship with anyone on the list of pre-merger trading. 
In addition to his prison term, Pinto-Thomaz was sentenced to three years of supervised release and ordered to 
pay a fine of $15,000 and a forfeiture money judgment in the amount of $7,500. 
Millul and Oujaddou each previously pled guilty and were to be sentenced on July 30. 
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Narcotics 
Castro 
Drug Dealer Forfeits Over $4M in Bitcoin as Part of a Guilty Plea 
All Stocks 
By Ravi Rd 
7/31/19 
According to a July 25 press release from the United States Attorney's Office of the Southern District of New 
York, the very active Bitcoin drug dealer Richard Castro has pleaded guilty of committing illicit activities such 
as money laundering and distributing three controlled substances through the dark web and encrypted emails. 
Castro was charged by the US Department of Justice (DoJ) and agreed to forfeit more than $4 million including 
cryptocurrency funds available in his seven different Bitcoin wallets. 
Castro, 36-year-old based in Windermere, Florida, operated under multiple badges, such as "Chems_usa," 
"Chemical_usa" and "Jagger109" to distribute three controlled opioid substances namely carfentanil, fentanyl, 
and phenyl fentanyl. Dream Market and AlphaBay were two of his primary market places on the dark web, 
where he sold drugs in exchange for cryptocurrency. 
The three controlled opioid substances were sold from November 2015 to 2019 by Castro and another co-
conspirator, Luis Fernandez. Fentanyl, the first of these three is considered to be significantly stronger than 
heroin while Carfentanil is believed to be 100 times stronger than fentanyl. Castro sold these substances under 
the three aforementioned monikers which ultimately used to prove that he is indeed the leader of this 
conspiracy. 
On Dream Market, Castro once boasted about 3,200 transactions that he had completed on various dark web 
marketplaces. Out of these 3,200 transactions, 1,800 transactions were successfully completed on AlphaBay 
alone. The conspirators apparently also received many positive reviews for the quality of synthetic opioid 
substance they were selling. 
In June 218, Castro informed his clients that he would only accept orders received by encrypted emails and 
declared the organization is getting the business off from the dark web. Customers who wanted to buy narcotics 
had to acquire the address of the encrypted email from "Chems_usa" by paying certain fees. Unfortunately for 
Castro, an undercover law enforcement officer also obtained the encrypted email and placed an order, which 
ultimately led to his arrest. 
Castro was accepting the payments in Bitcoin which were later distributed in seven different BTC wallets. 
Manhattan U.S. Attorney Geoffrey S. Berman said: 
"As he admitted today, for years, Richard Castro used the dark web to distribute prolific quantities of powerful 
opioids, including fentanyl and carfentanil. Castro thought he could hide behind the anonymity of the Internet, 
and use online pseudonyms to deal drugs — like thems_usa' and themical_usa.' Thanks to our law 
enforcement partners, 'Chems_usa' is now in U.S. prison." 
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Castro has agreed to forfeit $4,156,198.18 including the funds on those seven Bitcoin wallets. 
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Rochester Drug Company 
Distributor Has Been Shipping Excess Opioids to Small Towns 
Legal Reader 
By Sara E. Teller 
7/31/19 
Miami-Luken Inc., an Ohio drug wholesale distributor, and four people including two former executives have 
been charged with selling millions of pills amid the opioid epidemic despite knowing the dangers. The 
indictment charged the Springboro, Ohio-based company; Anthony Rattini, the company's former president; 
James Barlay, former compliance officer, and two pharmacists with "conspiring to distribute controlled 
substances." Prosecutors have alleged "Miami-Luken ignored obvious signs that drugs were being diverted to 
illegal users and dealers between 2011 and 2015." The company was shipping 4.9 million pills to Miller-
West's drugstore in Oceana, W.Va., where the population is just under 1,400. 
"Miami-Luken and the executives failed to guard against the dangerous drugs it was shipping to pharmacies in 
five states from being diverted for illegal uses or to report suspicious orders to the U.S. Drug Enforcement 
Administration," they added. 
The distributor shipped millions of pills to desolate and rural areas of Appalachia which was hit especially hard 
by the epidemic. "Records show Miami-Luken also distributed 3.7 million hydrocodone pills from 2008 to 
2011 to a pharmacy in Kermit, West Virginia, a town of just 400 people," prosecutors said. The pharmacists 
charged were Devonna Miller-West, the owner of Oceana, West Virginia's Westside Pharmacy, and Samuel 
Ballengee, owner of Williamson, West Virginia's Tug Valley Pharmacy. 
The company was also shipping some to other "unnamed pharmacists and physicians," the indictment alleged. 
"There's a need, in my opinion, to devote sufficient charges right here and now to stop the dying," United States 
Attorney Benjamin C. Glassman said, adding investigators found "many overdose deaths that could arguably be 
linked to the conduct of people accused in the conspiracy." 
In April of this year, criminal charges were brought against Rochester Drug Co-operative. Geoffrey S. Berman, 
the United States Attorney for the Southern District of New York, and Ray Donovan, the Special Agent in 
Charge of the New York Division of the U.S. Drug Enforcement Administration (DEA), announced the 
charges. Rochester Drug Co-Operative is one of the 10 largest pharmaceutical distributors in the United States. 
Charges were also filed against Laurence F. Doud III, the company's former chief executive officer; and 
William Pietruszewski, the company's former chief compliance officer. The indictment was specifically for 
"unlawfully distributing oxycodone and fentanyl, and conspiring to defraud the DEA," according to court 
documents. 
Berman said at the time, "This prosecution is the first of its kind: executives of a pharmaceutical distributor and 
the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the 
opioid epidemic that is ravaging this country. Our Office will do everything in its power to combat this 
epidemic, from street-level dealers to the executives who illegally distribute drugs from their boardrooms." The 
company paid $20 million to resolve the charges. 
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DEA Special Agent in Charge Ray Donovan said, "Today's charges should send shock waves throughout the 
pharmaceutical industry reminding them of their role as gatekeepers of prescription medication. The 
distribution of life-saving medication is paramount to public health; similarly, so is identifying rogue members 
of the pharmaceutical and medical fields whose diversion contributes to the record-breaking drug overdoses in 
America. DEA investigates DEA Registrants who divert controlled pharmaceutical medication into the wrong 
hands for the wrong reason. This historic investigation unveiled a criminal element of denial in RDC's 
compliance practices and holds them accountable for their egregious non-compliance according to the law." 
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Civil 
Life Spine 
Lawsuit against Huntley-based medical device company alleges kickback scheme 
Northwest Herald 
By Drew Zimmerman 
7/30/19 
Life Spine, a medical technology manufacturer in Huntley, is the defendant in a federal lawsuit alleging 
violations of the False Claims Act by offering lucrative incentives to surgeons in exchange for their use of Life 
Spine products. 
The suit, which was filed last week by the U.S. Attorney's Office in the Southern District of New York, alleges 
that the company entered into agreements with dozens of surgeons as a means to pay more than $7 million in 
illegal kickbacks — including consulting fees, royalties and intellectual acquisition payments - for the surgeon's 
use of Life Spine's equipment. 
The suit also alleges that these agreements, spanning an estimated seven-year period, were done with the 
knowledge, involvement and participation of Life Spine President and CEO Michael Butler and Vice President 
of Business Development Richard Greiber, who also are being charged. 
"Defendants are liable for damages based on the payment of claims submitted to Medicare and Medicaid for 
medical services and procedures involving Life Spine Products that were tainted by illegal kickbacks," the suit 
reads. 
About half of Life Spine's total domestic sales of spinal products between January 2012 and at least December 
2018, were attributable to surgeries performed by these paid surgeons, according to the suit. 
In addition to the consulting fees and royalties being paid, surgeons also were treated to dinners at high-end 
restaurants, Chicago Cubs games and other perks. 
"As alleged, Life Spine and its senior management flagrantly ignored the law by paying surgeons millions of 
dollars in fees and royalties to get them to use Life Spine products during spinal surgeries," Manhattan U.S. 
Attorney Geoffrey S. Berman said in a release. "Kickbacks to doctors can alter or compromise their judgment 
about the medical care and services to provide to patients, and can increase healthcare costs." 
For the first two counts of violating the False Claims Act — which are against Life Spine, Butler and Greiber —
the plaintiff is seeking treble damages and civil penalties to the maximum amount allowed by state law. 
For the third count of unjust enrichment — which is only against Life Spine — the plaintiff is seeking damages to 
the extent allowed by law. 
The plaintiff also is seeking pre- and post-judgment interest, costs and any other relief the court deems 
appropriate. 
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A statement from Life Spine said that both parties are engaged in discussions and look forward to resolving the 
matter. 
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Matters of Interest 
The U.S. said a California cherry-picker went to Pakistan for terrorist training. Now the case has 
collapsed. 
Washington Post 
By Meagan Flynn 
7/31/19 
It was a month after 9/11, and Osama bin Laden's face flashed across the news on Naseem Khan's 'IV screen. 
The FBI was sitting in his living room in Bend, Ore., and Khan sensed an opportunity. The agents had come for 
an entirely different purpose and were ready to leave — until Khan pointed at the screen and said he thought he 
could help with something else. A few years ago, he said, he saw bin Laden's second-in-command, Ayman al-
Zawahiri, one of the most wanted terrorists in the world, at a mosque in the wine-country town of Lodi, Calif. 
The agents perked up, intrigued by the possibility. Had they really just stumbled into a hot tip on al-Qaeda 
while speaking to a 28-year-old McDonald's worker and convenience store clerk? The FBI thought Khan was 
onto something — a possible "sleeper cell" of terrorism hidden in Lodi — and decided to dispatch him there as 
a confidential informant. 
Khan wouldn't find any associates of Zawahiri at the mosque in Lodi, and U.S. officials and terrorism experts 
now doubt his initial claim about Zawahiri was ever true. But Khan would find 19-year-old Hamid Hayat —
who would soon become the face of homegrown terrorism in post-9/11 America. 
They met at the mosque, and Khan learned Hayat was taking a trip to Pakistan with family. Over and over, in 
recorded conversations, he returned to the same question: Would Hayat commit to attending a terrorist training 
camp, as he had promised? 
Now, a judge's order on Tuesday casts doubt on whether Hayat ever actually did. 
Hayat, a cherry-picker and son of an ice cream truck driver, was convicted of attending the alleged terrorist 
training camp and sentenced to 24 years in prison in 2006. Prosecutors, relying on Khan and Hayat's own 
statements, alleged that he attended the camp for three to six months sometime in 2003. The case would become 
one of the most high-profile examples of the government's fight against terrorism in the immediate aftermath of 
9/11, especially because Hayat, after hours of interrogation by FBI agents, confessed to attending the camp. 
But on Tuesday, U.S. District Judge Garland E. Burrell Jr. vacated his conviction and sentence, finding that 
Hayat had inadequate defense during the 2006 trial while casting doubt on the facts of the case. Burrell 
questioned whether jurors would have convicted him had they heard evidence from witnesses in Pakistan, 
which the judge said likely would have "undermined" jurors' confidence in Hayat's confession alone. His 
attorneys have maintained the confession was coerced during an exhausting interrogation. 
Had the defense attorney actually interviewed any witnesses in Pakistan who spent significant time with Hayat 
during his trip, she would have discovered that they recalled Hayat spent most of his time playing video games 
and cricket and that the purpose of his visit was for his family to find him a wife, according to Burrell's order. 
No one identified any prolonged disappearance that would have allowed him to visit a terrorist training camp 
for three to six months as prosecutors alleged and Hayat said in the confession, Burrell noted. Burrell, who 
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oversaw Hayat's original trial, found the witnesses gave consistent statements and could have provided Hayat a 
credible alibi. 
"Showing that Hayat could not have been at a jihadi training camp for the 'period of months' specified in the 
indictment would have been completely consistent with the defense that Hayat's confession should not be 
credited and the government lacked other supporting evidence," a U.S. magistrate wrote in making the 
recommendation that Hayat's conviction be vacated. Burrell adopted most of the magistrate's findings of fact. 
The government has not decided yet whether to appeal the decision, a spokeswoman in the U.S. attorney's 
office in the Eastern District of California said in a statement, the Sacramento Bee reported. "We are in the 
process of reviewing the district court decision and assessing what steps, if any, should be taken and 
considering all our options," the statement said. 
Hayat, now 36, is currently being held in a federal prison in Phoenix. His attorneys are seeking his immediate 
release. 
The case against Hayat and his father, Umer, who was accused of lying to the FBI, heaped international 
attention on the Northern California town of Lodi. Seemingly overnight, the town went from the zinfandel 
capital of the world to an alleged terrorism "sleeper cell" — a claim authorities would later walk back. 
At the time he met Khan in August 2002, Hayat lived in his parents' garage and didn't have many friends, as 
the Intercept recounted in a 2016 investigation. Posing as a radical Islamist, Khan nudged Hayat into 
conversations that were anti-American and supportive of Islamic fundamentalist groups, and to his delight 
Hayat went along with it, according to recorded conversations cited in federal court documents. Hayat approved 
of the beheading of Wall Street Journal journalist Daniel Pearl by Pakistani militants. He told Than he believed 
jihadists had attended his grandfather's religious school in Pakistan and claimed his grandfather was so 
politically well connected that the Pakistani president enlisted him in efforts to persuade the Taliban to turn over 
bin Laden after 9/11. 
Then came the terrorist camps. Hayat said he had seen one in an online video — and expressed interest in going 
himself. Khan, feeding the intel to the FBI, egged him on. 
But once in Pakistan, Hayat kept making excuses, according to the judge's order. When Khan told him he was 
being "lazy," Hayat claimed the climate had changed and it got too hot outside — the terrorist camp was 
canceled, he said. Than was starting to get mad. His nudges turned to threats. 
"God willing, when I come to Pakistan and I see you, I'm going to ... force you to, get you from your throat and 
... throw you in the madrassa," Than said in one expletive-laden recorded conversation, as the Intercept 
reported. 
"I'm not going to go with that," Hayat said. 
"Oh yeah, you will go," Than told him. "Yeah, you will go. You know what? Maybe I can't fight with you in 
America, but I can beat your a-- in Pakistan, so nobody's going to come to your rescue." 
In their last conversation, according to the Intercept, which obtained all the recordings, Hayat said he "never 
intended on going to a camp." 
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Hayat denied attending a camp in his first interview with the FBI in Japan, before flying to San Francisco. He 
confessed during his second interview in California upon his return in June 2005. 
"FBI: Al Qaeda plot possibly uncovered," rang a CNN headline in June 2005, saying those involved "Trained 
on how to kill Americans." 
Months after Hayat's arrest, then-director of national intelligence, John D. Negroponte, testified in a 
congressional hearing that a "network of Islamic extremists in Lodi, Calif., for example, maintained connections 
with Pakistani militant groups, recruited United States citizens." 
But ultimately, no other terrorism cases arose from the investigation except for the one against Hayat. Two 
imams were investigated but were never criminally charged with anything. They had overstayed religious 
worker visas, authorities discovered. 
A retired FBI agent who watched Hayat's interrogation and the resulting confession told the Los Angeles Times 
it was "the sorriest interrogation, the sorriest confession, I've ever seen," believing the agents fed Hayat the 
details they wanted to hear and that Hayat repeated them so he could leave. He was barred from offering his 
testimony at trial. Burrell found that the failure to challenge the validity of the confession by presenting a false 
confession expert also contributed to his finding that Hayat had ineffective counsel. 
Khan was ultimately paid nearly $230,000 for assisting the FBI over three years. During Hayat's trial, his 
defense attorney questioned how one fast-food worker's implausible claim that he saw the world's most wanted 
terrorist in a small-town mosque could have "sparked this whole investigation with this ridiculous claim," the 
Times reported in 2006. 
Hayat's attorneys filed an appeal in 2014 and ultimately sought to interview numerous witnesses in Pakistan 
who could account for his whereabouts during the trip from 2003 to 2005. They appeared for sworn depositions 
on video in 2018. When Hayat's attorney, Dennis Riordan, asked his uncle whether he "would have known" if 
Hayat disappeared from their rural hamlet, Muhammad Anas said, "Naturally, I would have noticed," the 
Marshall Project reported then. 
The judge found that the witnesses "corroborated each other on some important points," regarding trips the 
family took throughout Pakistan and who they visited. Once or twice a month, they traveled to a hospital for his 
mother's medical treatment. 
On Tuesday, Hayat's family issued a statement applauding the judge's decision to throw out Hayat's 
conviction, the Sacramento Bee reported. 
"We have been waiting 14 long years for Hamid to be freed," the statement read. "Hamid cannot get those 14 
years of his life back, but we are relieved to see the case take such a big step forward. We miss him and hope to 
be reunited with him soon." 
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Fed Cuts Interest Rates for First Time Since 2008 Crisis 
New York Times 
By Jeanna Smialek 
7/31/19 
The Federal Reserve cut interest rates for the first time in more than a decade on Wednesday as it attempted to 
guard the record-long economic expansion against mounting global risks. 
The widely expected quarter-point move, the Fed's first since it cut rates to near zero in 2008, is meant to 
protect the economy against the potentially harmful effects of a growth slowdown in China and Europe and 
uncertainty from President Trump's trade war. 
"In light of the implications of global developments for the economic outlook as well as muted inflation 
pressures, the committee decided to lower the target range for the federal funds rate," according to the Federal 
Open Market Committee's policy statement. 
But the Fed did not indicate that this was the beginning of a rate-cutting campaign, suggesting instead that the 
cut was a minor adjustment intended to help the economy weather any challenges from slowing global growth 
and Mr. Trump's trade fights. 
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Catch up and prep for the week ahead with this newsletter of the most important business insights, delivered 
Sundays. 
While Jerome H. Powell, the Fed chair, left the door open to additional rate moves if the economy showed signs 
of sputtering, he did not indicate the central bank was poised to engage in the sort of deep cutting cycle that the 
Fed has done in the past to avert or offset recessions. 
"It's not the beginning of a long series of rate cuts - I didn't say it's just one," Mr. Powell said at a news 
conference following the Fed's two-day policy meeting. "What we're seeing is that it's appropriate to adjust 
policy to a somewhat more accommodative stance over time, and that's how we're looking at it." 
The widely expected move from the central bank was initially greeted with a shrug in financial markets, where 
investors have been factoring in a rate cut for months. But the stock market turned lower after Mr. Powell began 
his news conference at 2:30 p.m., as investors absorbed the chair's comments as indicating the Fed was unlikely 
to make additional cuts anytime soon, as investors had hoped. 
By the end of the day, the S&P 500 was down 1.1 percent. It was the benchmark index's worst decline since 
May 31. 
The Fed dropped its target rate to a range between 2 percent to 2.25 percent. Officials also announced an early 
end to its efforts to shrink the Fed's balance sheet, another attempt to keep the economy moving. The central 
bank's holdings of government-backed bonds swelled during the financial crisis as it bought assets to try to 
reinvigorate growth. Policymakers have been slowly siphoning off securities to return their balance sheet to a 
more normal size, and that process was slated to end in September. It will now conclude Aug. I. 
Why the Federal Reserve Cut Interest Rates 
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The move is what's called an "insurance cut" — one that central bankers are making to keep growth chugging 
along. 
Both Eric Rosengren, the president of the Federal Reserve Bank of Boston, and Esther George, the president of 
the Federal Reserve Bank of Kansas City, voted against Wednesday's decision, preferring instead to leave rates 
unchanged. Those dissents marked the second and third of Jerome H. Powell's term as chair. 
While Fed officials said they expect economic expansion to continue and the labor market to remain strong 
"uncertainties about this outlook remain." 
Mr. Powell said the Fed's move was "intended to insure against downside risks from weak global growth and 
trade tensions." 
He said that manufacturing around the world was weakening and that Mr. Trump's trade dispute was continuing 
to spook American businesses. "The ongoing uncertainty is making some companies more cautious about their 
capital spending," he said. 
Officials did not indicate in their statement whether this cut would be followed by additional moves. The Fed's 
June economic projections suggest policymakers envision cutting rates slightly to shore up the economy, rather 
than beginning an easing cycle that will return rates to zero. 
"As the committee contemplates the future path of the target range for the federal funds rate, it will continue to 
monitor the implications of incoming information for the economic outlook and will act as appropriate to 
sustain the expansion," the Fed said in its statement, seemingly leaving its options open. 
Mr. Powell said the committee viewed the move as a "mid-cycle adjustment to policy," suggesting that the Fed 
sees this cut as more similar to two instances in the 1990s, during which the Fed moved rates down slightly to 
get the economy through periods of uncertainty, rather than the beginning of a rate-cutting campaign. 
The Fed's rate cut carries political risks, given Mr. Trump's attacks on the central bank. Mr. Trump has been 
denouncing the Fed in speeches and on Twitter for the past year, criticizing its four 2018 rate increases and 
blaming its policies for slowing the American economy. Some onlookers may see Wednesday's move as caving 
to the president. 
The Fed operates independently of the White House. It attributed the change, which officials have been 
signaling for months and which investors fully expected, to growing economic concerns. 
"We also don't conduct monetary policy to prove our independence," Mr. Powell said. 
The central bank is trying to extend a record-long economic expansion, because officials believe that doing so 
will allow the Fed to achieve its goals of maximum employment and slow but steady inflation. The 
unemployment rate is hovering around its lowest level in 50 years, but that has yet to push wages dramatically 
higher in a way that forces companies to lift prices more quickly. 
Inflation has run shy of the Fed's 2 percent goal since the central bank formally adopted it in 2012. A little 
inflation helps to grease the wheels of a healthy economy, allowing businesses to raise wages faster and lifting 
interest rates, giving the central bank more room to cut in the event of a downturn. 
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SDNY News Clips, Wednesday, July 31, 2019 
Prices picked up just 1.6 percent in the year through June, not counting volatile food and fuel costs. 
Wages are growing only moderately. An index of employment costs climbed by 2.7 percent in the second 
quarter from a year earlier, less than expected and a slowdown from earlier in 2019, according to data released 
on Wednesday. 
Global policy uncertainty has also increased, and manufacturing is slumping the world over. Growth is slowing 
in China and Europe, and Mr. Trump's trade war with China and threats of further tariffs on United States 
trading partners are stoking uncertainty and causing businesses to hold off on investment. 
Those developments threaten the economic outlook, even as growth remains solid, consumer spending is robust 
and the job market holds up for now. 
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