Tag Archive: Bank Fraud

Aug 22 2018

Tuesday’s Trifecta

Tuesday was quite day for the Trump administration and the Republican party. Trump’s personal lawyer and “fixer” Michael Cohen plead guilty in a New York federal court to eight criminal counts and implicated Donald Trump in a plea deal with prosecutors of the Southern District of New York. The counts against Cohen included tax fraud, …

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May 14 2018

Bad Lawyers: Trump’s Fixer

By now it is well known that Donald Trump’s personal lawyer and fixer, Michael Cohen, doesn’t really practice law. As a graduate of one of the worst law schools in the US, Cohen functions mostly as a bagman for Trump and his business, that has been under the watchful eye of federal investigators for years …

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May 03 2018

Guiliani Spills the Beans

Wednesday night Donald Trump’s lawyer, former US Attorney and NYC Mayor, Rudolph Guiliani appeared with Fox News’ Sean Hannity spilling the beans on the $130,000 payment to porn star Stormy Daniels creating even greater legal headaches for Trump. In the typical long winded interview, Guiliani revealed that Trump repaid his private lawyer Michael Cohen after …

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Feb 03 2017

The Resistance: Hold On To Your Wallets, One More Time

The Dodd-Frank financial regulatory bill may not be perfect but it is better than nothing. Donald Trump is now planning to gut it because, as he so bluntly put it, his friends can’t get loans “We have some of the bankers here. There’s nobody better to tell me about Dodd-Frank than Jamie, so you’re going …

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Apr 11 2016

Nobody Goes To Jail

Once again the Obama Department of Justice has reached a settlement with a To Big To Fail Bank for pennies on the dollar and let the perpetrators walk away without criminal sanctions or penalties. Goldman Sachs will pay $5.06bn for its role in the 2008 financial crisis, the US Department of Justice said on Monday. …

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May 27 2015

DOJ Soccer Corruption Arrests. Why Not the Bankers?

On Wednesday in the early morning hours in Zurich, Switzerland, at a five star hotel, there were six phone calls made by the concierge to six rooms telling the occupants: “Sir,” the concierge said in English, “I’m just calling you to say that we’re going to need you to come to your door and open it for us or we’re going to have to kick it in.” How polite.

The hotel, which overlooks Lake Zurich, provided an unlikely setting for the apprehension of six global soccer executives who were arrested on corruption charges and now face extradition to the United States. The operation took less than two hours and was strikingly peaceful – no handcuffs, no guns drawn. It also involved an unusual use of a bedsheet.

Raids in the United States are typically led by armed SWAT team members wearing bulletproof vests and helmets, but the Swiss took a more subtle approach. Rather than storming into the executives’ rooms and hauling them out in their pajamas, the officers waited for the men to come to the door and then gave them a chance to get dressed and pack their bags.

The officers appeared to lead the officials out one by one, through several exits, including a side door, the hotel’s garage and, in one case, the main entrance.

Thus started the arrests of six global soccer executives on corruption charges. The indictments were brought by the US Justice Department stemming from an FBI and IRS investigation into the business practices of FIFA, the world governing body of the world’s most popular sport. soccer.

The Justice Department, F.B.I. and I.R.S. described soccer’s governing body in terms normally reserved for Mafia families and drug cartels, saying that top officials treated FIFA business decisions as chits to be traded for personal wealth. One soccer official took in more than $10 million in bribes, Attorney General Loretta E. Lynch said.

The schemes involving the fraud included the selection of South Africa as the host of the 2010 World Cup; the 2011 FIFA presidential elections; and several sports-marketing deals. [..]

The Department of Justice indictment names 14 people on charges including racketeering, wire fraud and money laundering conspiracy. In addition to senior soccer officials, the indictment also named sports-marketing executives from the United States and South America who are accused of paying more than $150 million in bribes and kickbacks in exchange for media deals associated with major soccer tournaments. [..]

The promise that the investigation would continue raised the specter of more arrests, but officials would not comment on whether they were investigating Sepp Blatter, the FIFA president and the man widely regarded as the most powerful person in sports. One federal law enforcement official said Mr. Blatter’s fate would “depend on where the investigation goes from here.” [..]

United States law gives the Justice Department wide authority to bring cases against foreign nationals living abroad, an authority that prosecutors have used repeatedly in international terrorism cases. Those cases can hinge on the slightest connection to the United States, like the use of an American bank or Internet service provider.

Switzerland’s treaty with the United States is unusual in that it gives Swiss authorities the power to refuse extradition for tax crimes, but on matters of general criminal law, the Swiss have agreed to turn people over for prosecution in American courts.

What Esquire’s Charlie Pierce said:

Here and overseas, the entire corporate universe is shot through with metastatic corruption and crime. It is an essential part of the business model almost everywhere, from Wall Street offices to the pitch at Wembley. FIFA’s corruption is more than an endemic phenomenon. FIFA was simply one corrupt enterprise working with and through hundreds of other corrupt enterprises. There are governments, and there are communications empires, and there are all manner of companies advertising their wares — the “corporate partners” of a claque of brigands. If you did business with the crooks of FIFA, you’re a crook, too. There’s no way to avoid it. All of them are guilty. All of them are responsible. All of them are complicit in the corruption in the spotlight today, and in the death of anonymous workers in Qatar whose names they don’t even know. The whole goddamn corporate universe is begging for a gigantice RICO indictment.

It seems the Justice Department is capable of investigating and obtaining indictments against officials of an organization whose business practices have been described as “byzantine and impenetrable,” why can’t the DOJ do the same for the bankers of JPMorgan Chase, HSBC, Citibank, Bank of America, et al? It apparently is not that hard, Loretta.

Nov 12 2014

The Nightmare on Wall Street

Attorney General Eric Holder claimed that the banks were too big and too hard to prosecute for the “massive criminal securities fraud” behind the high risk mortgage securities that led up to the 2008 financial collapse. Instead the Justice Department opted for civil settlements with large fines with no admission of any wrong doing.

Actually, it wasn’t. It appears that the Obama administration’s chief law enforcement officer chose not to prosecute despite all the evidence at his disposal. In his return to Rolling Stones, investigative journalist Matt Taibbi introduces Alayne Fleischmann, JPMorgan Chase’s $9 billion nightmare:

She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn’t take it anymore.

“It was like watching an old lady get mugged on the street,” she says. “I thought, ‘I can’t sit by any longer.'” [..]

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.

Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”

Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.

She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.

This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.

Matt and Ms. Fleischmann joined Democracy Now‘s hosts Amy Goodman and Juan González to discuss ow JPMorgan wrecked the economy and avoided prosecution.

The full transcript can be read here

Mar 13 2014

The Best Way to Rob a Bank is to Own One

The Best Way to Rob a Bank is to Own One

William Black is an associate professor of economics and law at UMKC. He has held many prestigious positions, including executive director for Fraud Prevention. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae’s former senior management. He is a criminologist and former financial regulator.

Jan 08 2014

A Tale of Two Frauds

Why are these two tales of fraud not the same in the eyes of the law?

Charges for 106 in Huge Fraud Over Disability

By William K. Rashbaum and James C. McKinley Jr.JAN. 7, 2014

The retired New York City police officers and firefighters showed up for their psychiatric exams disheveled and disoriented, most following a nearly identical script.

They had been coached on how to fail memory tests, feign panic attacks and, if they had worked during the Sept. 11, 2001, terrorist attacks, to talk about their fear of airplanes and entering skyscrapers, prosecutors said. And they were told to make it clear they could not leave the house, much less find a job. [..]

Former police officers who had told government doctors they were too mentally scarred to leave home had posted photographs of themselves fishing, riding motorcycles, driving water scooters, flying helicopters and playing basketball.

“The brazenness is shocking,” Cyrus R. Vance Jr., the Manhattan district attorney, said on Tuesday.

While those fraudsters were being indicted, arrested and arraigned, these fraudster were planning their next rip off of their investors.

JPMorgan Is Penalized $2 Billion Over Madoff

By Ben Protess and Jessica Silver-Greenberg

Preet Bharara, the United States attorney in Manhattan, and Jamie Dimon, the chief executive of JPMorgan Chase, gathered in Lower Manhattan as Mr. Bharara’s prosecutors were considering criminal charges against Mr. Dimon’s bank for turning a blind eye to the Ponzi scheme run by Bernard L. Madoff. Mr. Dimon and his lawyers outlined the bank’s defense in the hopes of securing a lesser civil case, according to people briefed on the meeting. [..]

Within weeks of meeting Mr. Bharara and recognizing their limited bargaining power, JPMorgan’s lawyers accepted the $1.7 billion penalty, the people briefed on the meeting said, which was within the range that prosecutors initially proposed. The bank also agreed to pay $350 million to the Office of the Comptroller of the Currency, accepting the agency’s only offer, one of the people said.

It could have been worse for the bank. At one point, prosecutors were weighing whether to demand that the bank plead guilty to a criminal charge, a move that senior executives feared could have devastating ripple effects. Rather than extracting a guilty plea, prosecutors struck a so-called deferred-prosecution agreement, suspending an indictment for two years as long as JPMorgan overhauls its controls against money-laundering. [..]

For JPMorgan, the Madoff case is the bank’s latest steep payout to the government. In November, JPMorgan paid a record $13 billion to the Justice Department and other authorities over its sale of questionable mortgage securities in the lead-up to the financial crisis. All told, after paying these settlements, JPMorgan will have paid out some $20 billion to resolve government investigations over the last 12 months. [..]

And critics of Wall Street are unsatisfied, noting that Mr. Bharara’s office opted to defer prosecution and did not charge any JPMorgan employees with wrongdoing.

“Banks do not commit crimes; bankers do,” said Dennis M. Kelleher, the head of Better Markets, an advocacy group.

A United States District Judge for the Southern District of New York, Jed Rakoff, wants to know why have no high-level executives been prosecuted for the financial crisis

Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.

Who was to blame? Was it simply a result of negligence, of the kind of inordinate risk-taking commonly called a “bubble,” of an imprudent but innocent failure to maintain adequate reserves for a rainy day? Or was it the result, at least in part, of fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever more esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured?

If it was the former – if the recession was due, at worst, to a lack of caution – then the criminal law has no role to play in the aftermath. [..]

But if, by contrast, the Great Recession was in material part the product of intentional fraud, the failure to prosecute those responsible must be judged one of the more egregious failures of the criminal justice system in many years. [..]

In striking contrast with these past prosecutions, not a single high-level executive has been successfully prosecuted in connection with the recent financial crisis, and given the fact that most of the relevant criminal provisions are governed by a five-year statute of limitations, it appears likely that none will be. It may not be too soon, therefore, to ask why. [..]

But the stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary. For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in accountability, but also in ethical behavior. [..]

Without giving further examples, the point is that, in the aftermath of the financial crisis, the prevailing view of many government officials (as well as others) was that the crisis was in material respects the product of intentional fraud. In a nutshell, the fraud, they argued, was a simple one. Subprime mortgages, i.e., mortgages of dubious creditworthiness, increasingly provided the chief collateral for highly leveraged securities that were marketed as AAA, i.e., securities of very low risk. How could this transformation of a sow’s ear into a silk purse be accomplished unless someone dissembled along the way? [..]

Thus, Attorney General Eric Holder himself told Congress:

   It does become difficult for us to prosecute them when we are hit with indications that if you do prosecute-if you do bring a criminal charge-it will have a negative impact on the national economy, perhaps even the world economy.

To a federal judge, who takes an oath to apply the law equally to rich and to poor, this excuse-sometimes labeled the “too big to jail” excuse-is disturbing, frankly, in what it says about the department’s apparent disregard for equality under the law.

Dec 03 2013

Bank Fraud: They All Did It

Documents in JPMorgan settlement reveal how every large bank in U.S. has committed mortgage fraud



Transcript can be read here

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