Tag Archives: DOJ

The Inaugural Financial Fraud Lemons of the Week Award Goes to DOJ

Posted on February 12, 2016 by | 2 comments

William K. Black
February 12, 2016     Bloomington, MN

The Bank Whistleblowers United announce the inaugural Financial Fraud Lemons of the Week award.  There can be no more fitting recipient than the ironically named Department of Justice (DOJ).  The “lemon” is used in the economics and criminology literature to refer to a car of surpassingly terrible quality.  The quality is so bad that the car can only be sold through fraud.  We will award it each week to an example of dishonesty or cowardice about financial fraud that is worthy of public ridicule.  We want to leave room in our scale for truly spectacular examples, so this first award will only receive Four Lemons.  The first award is for what has become a routine example of dishonesty and cowardice by DOJ.  Its conduct should be a scandal of national proportions, but by now everyone expects DOJ to embarrass our Nation when it deals with elite bankers.

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Now the DOJ Admits They Got it Wrong

Posted on September 11, 2015 by | 12 comments

William K. Black

September 10, 2015

By issuing its new memorandum the Justice Department is tacitly admitting that its experiment in refusing to prosecute the senior bankers that led the fraud epidemics that caused our economic crisis failed. The result was the death of accountability, of justice, and of deterrence. The result was a wave of recidivism in which elite bankers continued to defraud the public after promising to cease their crimes. The new Justice Department policy, correctly, restores the Department’s publicly stated policy in Spring 2009. Attorney General Holder and then U.S. Attorney Loretta Lynch ignored that policy emphasizing the need to prosecute elite white-collar criminals and refused to prosecute the senior bankers who led the fraud epidemics.

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HSBC Violates its Sweetheart Deal and Lynch Praises It

Posted on April 2, 2015 by | Comments Off on HSBC Violates its Sweetheart Deal and Lynch Praises It

By William K. Black
Quito: April Fools’ Day 2015

HSBC got a sweetheart deal from the Obama administration.  It laundered vast amounts of money for Mexico’s murderous Sinaloa cartel, helped bust sanctions for terrorists and mass murderers, and did not cooperate with the investigation.  The U.S. Attorney in charge of the case, Loretta Lynch, refused to prosecute any of the HSBC bankers or even sue them individually.  Instead, there was a pathetic non-prosecution agreement limited to HSBC.  Lynch is accused of not contacting either of the primary whistleblowers in the case.  The failure to contact one of the whistleblowers has already blown up in Lynch’s face as it became public a few months ago that the governments of the U.S. and Europe were provided many years ago with data on HSBC’s Swiss affiliate that show it was helping terrorists, genocidal leaders, the most violent drug gangs, and tens of thousands of wealthy people evade taxes.  Lynch failed to bring that case or use any of the invaluable data provided by the whistleblower who copied the files from the Swiss bank.

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The Euphemistic “White Collar Watch” is Addicted to Euphemism

Posted on November 8, 2014 by | 3 comments

By William K. Black
Kilkenny, Ireland: November 7, 2014

Kilkenomics pairs top professional comedians with economics contributors who share two characteristics: wide-ranging interests and knowledge and candor. This means that the contributors take clear positions and defend those positions with facts and logic. That refreshing willingness to actually be blunt about important things may be what set my teeth so on edge when I read the New York Times’ “White Collar Watch” feature. It is written by Peter J. Henning, who teaches, and writes about, white-collar crime. The problem is evident in the “brand” that Henning has chosen for his columns. Note the deliberate exclusion of the word “crime.” What is Henning doing – writing a column (from Detroit) on the lives of “white-collar” employees, professionals, and officers? His very brand is based on the bowdlerization of his academic specialty through euphemism.

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How the Rocket Scientists Aided the Senior Fraudulent Bank Officers

Posted on October 23, 2014 by | 2 comments

By William K. Black

In my first column in this two-part series I explained how the Department of Justice’s (DOJ) non-prosecutorial effort against the banksters’ frauds that caused the financial crisis had ended with a pathetic whimper uttered by Deputy Attorney General James Cole during his ritual exit interview with Bloomberg. Cole’s explanation for DOJ’s failure to prosecute a single senior banker for leading the three fraud epidemics that drove the financial crisis was that DOJ was “dealing with financial rocket science.” My first column made the point, which escaped DOJ and Bloomberg that if this were true it would presumably have been modestly important for DOJ to do something about the ability of “rocket scientists” to grow wealthy by leading the frauds that cost the U.S. $21 trillion in lost GDP and 10 million jobs. In my second column I explained why no rocket science was required to prosecute the senior bank officers that led the three most destructive epidemics of financial fraud. In light of a reader’s comment I promised to write this third piece on “rocket science” in the financial context.

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Not with a Bang but a Whimper: DOJ Says it Cannot Prosecute “Rocket Science” Frauds

Posted on October 18, 2014 by | 6 comments

By William K. Black

This is the way the Department of Justice’s (DOJ) greatest strategic prosecutorial failure ends, not with a bang but a whimper that it is too hard to prosecute “rocket science” frauds.  The context is the ritual Bloomberg exit interview with the senior DOJ official going off to make his new fortune.  The lucky fellow this week is Deputy Attorney General James Cole.  This genre of interview is designed to allow the man in the revolving door to announce his great accomplishments as a prosecutor, or in this case, non-prosecutor.  Cole gamely claims that zero prosecutions constitutes a brilliant success because DOJ’s civil cases “have resulted in banks paying huge fines and altering their behavior.”

“Holder today praised Cole as his ‘indispensable partner’ since taking the deputy’s job in January 2011. ‘Jim’s leadership and ingenuity have been critical in attaining historic results on behalf of the American people,’ Holder said in a statement.”

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Things About Mortgage Fraud that Holder Should End Today: Suspect Ethnic Groups

Posted on September 9, 2014 by | 8 comments

By William K. Black

I am returning to my series of articles about the pathologies that have caused the Department of Justice (DOJ) to suffer a strategic failure in prosecuting the banksters that led the three fraud epidemics that caused the financial crisis and the Great Recession.  I have been inspired by Tom Frank’s column in Salon covering our successful defense of a mortgage fraud case in Sacramento.  This column addresses the single most offensive thing I learned in the course of that case.  Under U.S. Attorney Ben Wagner’s leadership the Eastern District of California has begun targeting immigrants of Russian descent for mortgage fraud prosecutions.

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DOJ Trains AUSAs to Chase Mice While Lions Roam the Campsite

Posted on July 21, 2014 by | 7 comments

By William K. Black

In researching my series of articles on the critical omissions in Attorney General Eric Holder’s press release about the settlement with Citi I realized that I need to write multiple articles about the destructive role played by Benjamin Wagner. Holder made Wagner DOJ’s leader on mortgage fraud because Wagner was so willing to propagate the single most absurd, destructive, but so very useful (to the administration and the banksters) lie about mortgage fraud.

“Benjamin Wagner, a U.S. Attorney who is actively prosecuting mortgage fraud cases in Sacramento, Calif., points out that banks lose money when a loan turns out to be fraudulent. ‘It doesn’t make any sense to me that they would be deliberately defrauding themselves,’ Wagner said.”

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

Posted on November 26, 2013 by | 3 comments

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

Posted on November 14, 2013 by | 1 comment

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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