Tag Archives: DOJ

The NYT Implies that Not Prosecuting JPMorgan Proves DOJ’s Vigor

By William K. Black
(Crossposted at Benzinga.com)

 

No one expects Andrew Ross Sorkin’s slavish “Deal Book” lackeys to demand that the elite Wall Street bankers whose frauds drove the financial crisis be imprisoned, but the slavishness to the banks revealed when major news stories emerge continues to irritate if not surprise.  A recent embarrassment can be found here.

The “Deal Book” Spinmeisters

The context of the NYT article was the expected settlement between DOJ, various states, and JPMorgan.  The spin comes fast and hard, which would be great in cricket (or quarks) but, sadly, exemplifies the national paper of record’s “Deal Book” devotional pages.  The “Deal Book” shows that cricket masters can impart very different spins.  The first substantive paragraph’s spin is to minimize JPMorgan’s fraud.

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The Department of Justice’s Willful Blindness to the Willful Blindness of CEOs

By William K. Black

The best thing that the Department of Justice (DOJ) could do immediately to restore faith in the criminal justice system is to prosecute Steven Cohen, the head of SAC.  The indictment of SAC charges that many SAC officers committed crimes due to:  “institutional practices that encouraged the widespread solicitation and use of illegal inside information.”  That indictment supports that claim with detailed allegations.  For example, paragraph 6 states that “employees were financially incentivized to recommend to [Cohen] ‘high conviction’ trading ideas” that would inherently come from insider information.  Providing “high conviction” tips to Cohen was a job requirement and a code phrase that signaled to Cohen that he could invest his funds with confidence due to the insider information.  Paragraph 7 observes that “the predictable and foreseeable result … was systematic insider trading.”  Paragraph 11 explains that SAC investment managers had a duty to provide Cohen with “high conviction” deals and that Cohen made fulfilling this duty a top priority.  Paragraph 13 explains that the managers’ bonuses largely depended on the “high conviction” tips they made to Cohen.

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Is B of A the Most Embarrassing Department of Justice Suit Ever?

By William K. Black

The Department of Justice’s (DOJ) latest civil suit against Bank of America (B of A) is an embarrassment of tragic proportions on multiple dimensions.  In this version I explore “only” seven of its epic fails.

The two most obvious fails (except to the most of the media, which failed to mention either) are that the DOJ has once again refused to prosecute either the elite bankers or bank that committed what the DOJ describes as massive frauds and that the DOJ has refused to bring even a civil suit against the senior officers of the banks despite filing a complaint that alleges facts showing that those officers committed multiple felonies that made them wealthy by causing massive harm to others.  Those two fails should have been the lead in every article about the civil suit.

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How Dare DOJ Insult HSBC’s Crooks as Less “Professional” than Liberty Reserve’s Crooks?

By William K. Black

Standard Chartered and HSBC’s leaders must be doubly humiliated by the description by Mythili Raman, the acting head of the U.S. Department of Justice’s (DOJ) Criminal Division, of Liberty Reserve’s money laundering operation.  UK laws are, of course, very congenial to those suing for libel and I am sure that these banking titans are meeting with their solicitors to demand a retraction and apology from Raman.  In the very first clause of her May 28, 2013 statement to the media on the actions against Liberty Reserve’s controlling officers, Raman emphasized how “professional” they were as money launderers:  “Today, we strike a severe blow against a professional money laundering enterprise charged with laundering over $6 billion in criminal proceeds.”   In four paragraphs, she used the word “professional” three times and “sophisticated” once to describe Liberty Reserve’s money laundering.  Continue reading

By their responses ye shall know them

By William K. Black
(Cross posted at Benzinga.com)

A preliminary note:

Greetings from Davos!  I’m actually writing this over the mid-Atlantic as I return from being a keynote speaker at the annual “Public Eye” “shame prize” awarded to Goldman Sachs for its abuses.  The shame prize award was made in Davos during the World Economic Forum as a counter-WEF event.  Shell also “won” a shame prize, but I spoke on Goldman Sachs, the role of epidemics of accounting control fraud, and the WEF’s anti-regulatory and pro-executive compensation policies.  I explained that the anti-regulatory policies were intended to fuel the destructive regulatory “race to the bottom” and why the executive and professional compensation policies maximized the incentives to defraud.  I also explained that WEF was a fraud denier.  Collectively, these three WEF policies contributed to creating the intensely criminogenic environments that produce the epidemics of accounting control fraud driving our worst financial crises.  Detailed written developments of these arguments can be found here on our UMKC economics blog: New Economic Perspectives. Continue reading

The Second Great Betrayal: Obama and Cameron Decide that Banks are above the Law

By William K. Black

One of the “tells” that reveals how embarrassed Lanny Breuer (head of the Criminal Division) and Eric Holder (AG) are by the disgraceful refusal to prosecute HSBC and its officers for their tens of thousands of felonies are the false and misleading statements made by the Department of Justice (DOJ) about the settlement.  The same pattern has been demonstrated by other writers in the case of the false and disingenuous statistics DOJ has trumpeted to attempt to disguise the abject failure of their efforts to prosecute the elite officers who directed the “epidemic” (FBI 2004) of mortgage fraud.

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The WSJ Conflates Lending to Blacks with Imprudent Lending

By William K. Black

The Wall Street Journal has written a revealing editorial entitled:  A Fine for Doing Good: The Justice Department sues a bank for prudent lending.

The WSJ appears to have forgotten the concept of a poll tax as a means to exclude most blacks from voting.  Continue reading

Two Billion Dollars Lost because the FDIC Ignored United Commercial Bank’s Frauds

By William K. Black

The good news is that we finally have the second group ofindictments of senior bank officers.  The prosecution involves officers of United Commercial Bank (UCB), a roughly $10 billion San Francisco bank that originally specialized in lending to Chinese-Americans and became primarily a commercial real estate (CRE) lender.  The indictment deals only withthe cover up phase of UCB’s senior officers’ frauds.  I will show in future posts that the reportedfacts on UCB’s loans were consistent with accounting control fraud.   The UCB case is so rich in lessons that itwill take a series of articles to capture what the case reveals about thedegradation of regulation and prosecution of elite accounting controlfrauds. 

Here are the most essential facts.  In 2002,a court found that UCB’s senior managers had engaged in fraud to hide losses ona large loan for the purpose of fraudulently inducing another bank to bear thelosses.  It found the senior officers’conduct so outrageous that it awarded substantial punitive damages.  The FDIC, the SEC, and the Department ofJustice did nothing in response to the fraud.  

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