Carl Levin is one of the few people in DC who has tried to hold banks accountable — in his case, via investigations conducted at the Permanent Subcommittee on Investigations. Never mind that DOJ has serially taken his investigations and, seemingly, wiped their ass with them for all the banksters who have been held accountable as a result.
One particularly noteworthy ass-wiping came after Levin referred Goldman Sachs CEO Lloyd Blankfein to DOJ for lying to his customers and, more importantly, to Congress. To him.
The chairman of the U.S. Senate’s investigative subcommittee said he believes Goldman Sachs officials made misleading statements about their trading during the financial crisis and should be investigated criminally.
Sen. Carl Levin (D-Mich.) said on Wednesday that he plans to refer Goldman officials, and potentially officials from other organizations, to the Justice Department for possible prosecution and to the Securities and Exchange Commission for possible civil proceedings.
“In my judgment, Goldman clearly misled their clients and they misled the Congress,” said Levin, the chairman of the Senate Permanent Subcommittee on Investigations.
“We will be referring this matter to the Justice Department and the SEC,” Levin said.
DOJ did what it does — which apparently includes chatting up CEOs — while it is pretending to investigate when it is actually wiping its ass. Then after a year it decided it wasn’t going to prosecute Blankfein.
Still. Just over 2 years ago, Carl Levin believed that when people, even very powerful people, lie to Congress, DOJ should at least consider prosecuting them.
Levin also said he was still “troubled” by Director of National Intelligence James Clapper’s testimony to the Senate Intelligence Committee that the NSA did not collect data on millions of Americans.
“I’m troubled by that testimony, obviously. I don’t know how he’s tried to wiggle out from it, but I’m troubled by it,” Levin said. “How you hold him accountable, I guess the only way to do that would be for the president to somehow or other fire him.”
But, Levin added, “I think he’s made it clear that he regrets saying what he said, and I don’t want to call on the president to fire him although I am troubled by it.”
Golly! Clapper regrets what he said (or rather, that he got caught saying it?). So rather than suggesting we hold Clapper accountable the way Levin tried to do with Blankfein, he instead thinks maybe if the President feels like it on his own because Levin himself isn’t going to call on him to do this, Obama should “somehow or other fire” Clapper.
A lot of people on Twitter are talking about how dumb-as-shit Dzhokhar Tsarnaev’s college buddies, Azamat Tazhayakov, Dias Kadyrbayev, and Robel Phillipos were when they allegedly removed evidence relating to the Boston Marathon bombing and threw it in the trash or (in the case of Phillipos) lied about those activities.
I’m not convinced, though.
I’m not defending what the young men did. Nor am I vouching for their intelligence. Nor am I saying they shouldn’t be prosecuted — they should!
But I’m having a hard time distinguishing what they did from what, say, HSBC did, for years. Aside from the fact that HSBC affirmatively helped terrorists, rather than just covered up that help. And aside from the fact HSBC made a billion dollars doing so.
As a reminder, where’s what HSBC did — eliciting nary a blink of an eye from the same DOJ that is now (rightly) prosecuting these dumb-as-shit kids. They were a key — perhaps the key — bank providing Saudi al-Rajhi bank cash dollars. Details emerged in 2001 that the bank had been providing the dollars terrorists used in their plots, including the 9/11 plot. It took four years for HSBC to begin to get worried about it. But it still only halted the dollar trade for al-Rajhi while its US regulator, OCC, looked into its money laundering practices (it says something about HSBC’s awareness of the sensitivity of this issue that they didn’t halt their other abundant money laundering activities).
And then, once OCC was out of its hair, HSBC moved back into the cash dollar business with al-Rajhi, a bank reportedly involved with the most spectacular terrorist acts of recent years.
Just HSBC’s brief exit from the cash business with al Rajhi is similar to what Dzhokhar’s dumb-as-shit buddies did when they put his backpack in the public trash. Covering up terrorism.
When the FBI found sensitive — though it turned out, unclassified — documents in Thomas Drake’s basement, he was charged under the Espionage Act. When the Army found hundreds of thousands of classified — but not Top Secret — cables on Bradley Manning’s computer, they charged him with Espionage and Aiding the Enemy.
But when the FBI found Top Secret documents on Sudan — our actual enemy, if sanctions count — in Reagan National Security Advisor Robert McFarlane’s basement, it decided to investigate him for illegal lobbying.
The FBI has searched the apartment of former Reagan administration national security adviser Robert McFarlane for evidence of whether he lobbied for the government of Sudan, in violation of federal law.
The search warrant is on file in federal district court in Washington. It shows agents seized items this month including handwritten notes about Sudan and White House documents with classifications up to Top Secret.
From this I can only assume that McFarlane is being subjected to the same double standard that Clinton’s National Security Advisor Sandy Berger was (represented, it should be noted, by former Criminal Division chief Lanny Breuer), when he snuck 9/11 related documents out of the Archives, yet only plead guilty to a misdemeanor.
When National Security Advisors take top secret documents, they’re called lobbyists, not spies.
I can’t wait to find out what Condi Rice will be called if she’s ever caught with sensitive documents in her basement.
Remarkably, on the same day two Senators (one of them named in the article) reminded Eric Holder that Lanny Breuer said this,
I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.
The WaPo managed to ask no direct questions about this quote–or some of the obviously spiked cases against big banks–in this sloppy fellation of Lanny Breuer.
Granted it does ask about the Frontline show itself (though, refreshing as it was, Frontline focused on just one aspect of the mortgage fraud that Lanny’s department ignored; it’s pretty clear WaPo’s Sari Horwitz doesn’t even begin to understand that, though).
In a “Frontline” program on PBS last week, Breuer and the Justice Department were harshly criticized for not bringing criminal prosecutions against any Wall Street executives in connection with the 2008 financial collapse.
Curiously, rather than admit he consults with regulators and experts before he charges banksters, rather than repeat his theory that all it takes to deter CEOs (as opposed to little people) is to chat them up,
Look, I want to be clear, I don’t want to suggest for a moment that we don’t–and we will–aggressively pursue cases criminally but, I guess both as a defense lawyer, which I was for many years, a white collar defense lawyer and now as AAG, I don’t think we should completely discount the deterrent effect when we investigate cases even if we don’t bring them.
If a CEO or CFO of a major institution feels that he or she is subject to criminal liability, when we interview them or put them in the grand jury, they have lawyers and this is hanging over their head for years and years. It may be at the end we decide not to prosecute the company or the individual but I think it’s really inaccurate to suggest that that doesn’t have a very strong effect. I’m not sure CEOs on Wall Street right now feel as if they can do what they want and there’s no deterrence.
Lanny instead adopted a new excuse to deny responsibility for letting the most destructive criminals in the country walk free (note, Lanny appears to be ignorant of SarBox regulations that wouldn’t even require this kind of intent):
“I understand why people are upset,” Breuer said. “But we have 94 U.S. attorneys and they don’t report to me. Not one of them determined that there was a criminal case to be had. These are very complicated cases and they were just simply, on the merits, not cases that could be brought criminally.”
Breuer said Wall Street executives would have been prosecuted if the investigators could have proved criminal intent. “I have the same DNA in all of these cases,” Breuer said. “It’s just not plausible that in one area we would be overly scared and in all the other areas we would be aggressive.”
Well okay then. In this article, Lanny takes or is given credit for the BP pleas, two Medicare cases, 40 corporate cases (by Robert Khuzami, almost all of which resulted in settlements), the La Cosa Nostra take down, and LIBOR “prosecutions” (reportedly DOJ will charge UBS shortly). Of those, I’m only aware of the BP investigation being led by a task force rather than a traditional US Attorney structure. Yet Lanny wants to claim credit for all these prosecutions and settlements, but blame his US Attorneys–all 94 US Attorneys (!) when we’re really talking maybe 4 or 5 who would face a complex bankster case, and really just New York’s Preet Bharara, whom Lanny himself gave jurisdiction over some of the highest profile cases–for not prosecuting the banksters.
It’s not Lanny’s fault the banksters have gone free, you see, it’s the fault of people like John Leonardo, Arizona’s US Attorney, Alicia Limtiaco, Guam’s US Attorney, or Felicia Adams, Northern Mississippi’s US Attorney, all of whom had no hint of jurisdiction in these cases.
This, in spite of the fact that Lanny has repeatedly admitted being personally involved in the bankster cases.
This, in spite of the fact that Lanny did play a leadership role in one of the few cases that had a similar task force structure as BP–the mortgage fraud settlement. In that case, Lanny under-resourced the investigative team, ensuring it would be unable to do adequate investigation to reach adequate settlement. And he didn’t even show up for the big announcement that–basically–the settlement was immunizing the banksters for stealing millions of people’s homes. Somehow, now that it’s time to claim credit, Lanny has forgotten about that willful attempt to help banks bury their crimes.
Lanny has, in the past, clearly admitted to actions that led directly to amnesty for banksters. But in his effort to shore up his reputation as he heads out the door (though not until March 1, unfortunately), he’s gonna blame everyone else for the fact that, on his watch, the most destructive criminals in the country got a pass.
Update: And he spewed the same line to NPR:
“This department has been incredibly aggressive in dealing with the issues of the financial crisis,” Breuer told NPR. “Aggressive U.S. attorneys have looked at this. But time and again the career prosecutors have come back on those cases, on those securitization cases, and said we don’t have a criminal case to be brought….My message to the American people is that this Justice Department calls it the way it sees it.”
Last night, Frontline had a very good show exposing how derelict DOJ has been in not prosecuting any of the banksters who ruined the economy. It could have been far, far worse, as it dealt solely with the securitization crimes that were ignored. Nevertheless, it showed Lanny Breuer to be an arrogant jerk who insisted DOJ couldn’t prosecute, in spite of the abundant evidence of crime presented in the show.
Nevertheless, DOJ spent part of the day threatening Frontline to never cooperate again.
And, presumably, part of the day planting this way-too complimentary piece in the WaPo announcing Breuer’s departure.
Golly, was it only last week I was calling for Breuer’s firing?
Yesterday, the Office of the Comptroller of the Currency issued two orders to JP Morgan Chase, one related to its London Fail Whale, the other related to failures in its Bank Secrecy Act/Anti-Money Laundering compliance. With respect to latter order, OCC said, in part:
(1) The OCC’s examination findings establish that the Bank has deficiencies in its BSA/AML compliance program. These deficiencies have resulted in the failure to correct a previously reported problem and a BSA/AML compliance program violation under 12 U.S.C. § 1818(s) and its implementing regulation, 12 C.F.R. § 21.21 (BSA Compliance Program). In addition, the Bank has violated 12 C.F.R. § 21.11 (Suspicious Activity Report Filings).
(2) The Bank has failed to adopt and implement a compliance program that adequately covers the required BSA/AML program elements due to an inadequate system of internal controls, and ineffective independent testing. The Bank did not develop adequate due diligence on customers, particularly in the Commercial and Business Banking Unit, a repeat problem, and failed to file all necessary Suspicious Activity Reports (“SARs”) related to suspicious customer activity.
(3) The Bank failed to correct previously identified systemic weaknesses in the adequacy of customer due diligence and the effectiveness of monitoring in light of the customers’ cash activity and business type, constituting a deficiency in its BSA/AML compliance program and resulting in a violation of 12 U.S.C. § 1818(s)(3)(B).
That last one is the real peach. You see, in spite of the fact the order includes 22 pages of things JPMC “shall” do to fix this problem, the order did not include any fine. Remember, it has been less than 18 months since JPMC got caught–among other things–sending a ton of gold bullion to Iran in violation of sanctions. That time, at least, Treasury’s Office of Foreign Asset Controls fined JPMC, if only $88.3 million.
Still, here were are a year and a half later, with JPMC still refusing to police what it is helping its customers do, and the government is letting JPMC off with no fine.
Compare that to the treatment of Karen Gasparian, the manager of the G&A Check Cashing company out in LA. Today, he got sentenced to five years in prison for doing precisely what Jamie Dimon did: fail to comply with BSA/AML law. In his sentencing, he even submitted record of all the big banks that have skated for doing what he did, including HSBC’s 1.9 Billion wrist slap, and noted the disparity in treatment.
An even greater problem with the Government’s seeking a sentence of incarceration in this case is the disparity when compared to other instances of the same offense, or instances involving even more egregious conduct, such as much larger financial institutions conducting business with drug trafficking organizations and terroristic regimes like Iran. Time and time again, the United States Government has offered deferred prosecution agreements (and fines) to financial institutions whose conduct was exponentially more egregious than the conduct at issue here. Mr. Gasparian’s offense, while serious, was still far short of the conduct committed by these other institutions. Any sentence of incarceration in this case would be a loud proclamation that the rich and powerful receive one type of justice, while those less powerful receive another type.
The government, of course, insisted on enhancements to Gasparian’s sentence because his crime amounted to over $100,000 in a one year period (the government sent two confidential witnesses to cash checks at G&A, which is how they proved that amount).
Remember HSBC provided over $990 million in cash to a terrorist bank over a four year period. All that’s before you consider their money laundering for Mexican cartels and probable Russian mafia. Not a single HSBC employee was so much as indicted, much less sent to jail for five years or for a lifetime for material support for terrorism.
And now JPMC–and its “manager,” Jamie Dimon–not only get off without indictments, but without even a fine (at least not from OCC–OFAC may end up fining them).
The government submitted a bunch of sealed documents explaining why Gasparian should be treated so much more harshly than the big banks. I’m just going to assume the government explained what great intelligence work the big banks are doing to avoid being subjected to the rule of law.
Predictably, Lanny Breuer
waved his dick around boasted about this conviction.
“Karen Gasparian, Humberto Sanchez and their company G&A Check Cashing purposefully thwarted the Bank Secrecy Act, making it easier for others to use G&A to commit illegal activity,” said Assistant Attorney General Breuer. “They knew they were required to report transactions over $10,000, but deliberately failed to do so. As this case shows, check cashing businesses must adhere to our anti-money laundering rules, or else pay the consequences.”
This is the guy who, just one month ago, failed to even mention he was letting a bank that sent hundreds of millions in cash to a terrorist bank off without any charges.
At this point, it’s beginning to look like DOJ’s disparate treatment is not just about preserving his buddies the CEOs. But it’s about eliminating the little competitors like G&A so the equally corrupt big banks can take over their markets.
Update: Adding this from the government’s sentencing motion. The government insisted that Gasparian do time … as a deterrent.
Because there are hundreds of check cashers in Los Angeles as well as an underlying health care fraud problem, it is more important that the sentence here be sufficient to promote respect for the law and general deterrence for the types of criminal activities defendant engaged in as well as the health care fraudsters. A significant sentence is also necessary to reflect the serious [sic] of the offense, deter criminal conduct, and protect the public from defendant.
I’ve lost count of how many White House petitions are seeking some kind of vengeance for the harsh treatment of Aaron Swartz. Fire Carmen Ortiz. Fire Stephen Heymann. Pardon Swartz. Commute John Kiriakou’s sentence.
One of the most ethical suggestions I’ve seen (and I’m not even sure if there is a White House petition for it) is to fix the Computer Fraud and Abuse Act. [Update: Thanks to Saul Tannenbaum, here it is.]
The government should never have thrown the book at Aaron for accessing MIT’s network and downloading scholarly research. However, some extremely problematic elements of the law made it possible. We can trace some of those issues to the U.S. criminal justice system as an institution, and I suspect others will write about that in the coming days. But Aaron’s tragedy also shines a spotlight on a couple of profound flaws of the Computer Fraud and Abuse Act in particular and gives us an opportunity to think about how to address them.
I didn’t know Aaron personally, but he doesn’t strike me as the kind of guy who would seek individualized solutions to systemic problems. And one of the problems with the system that destroyed him is a law that badly criminalizes actions that don’t present much harm.
Moreover, as Corey Robin argues in this post, asking Obama to take action to absolve the actions of his own government defeats the point.
Asking the state to pardon Swartz doubly empowers and exonerates the state. It cedes to the state the power to declare who is righteous and who is wrong (and thereby obscures the fact that it is the state that is the wrongful actor in this case). The petitioning language to Obama only adds to this. The statement depicts Obama as somehow the good father who stands above the fray—much like how the Tsar was depicted in the petition of the Russian workers who marched with Father Gapon on the Winter Palace in 1905 and were summarily slaughtered.
Pardoning Swartz also would allow the government, effectively, to pardon itself.
These petitions seem to serve the purpose of pretending that Swartz’ treatment was abnormal.
It was not.
Not only has Obama’s Administration treated all those who liberate information without his government’s sanction as dangerous criminals, but his DOJ has been ruthless against just about everyone who is not a Wall Street Executive.
Jesslyn Radack–who knows how aggressively Obama’s DOJ has targeted those who free information as well as anyone–discusses the legal futility of trying to go after Stephen Heymann. But she also notes that the real remedy to prevent more people from experiencing what Swartz did is to start fixing DOJ.
What might be more realistic is for citizens to demand that the Senate Judiciary Committee exercise meaningful oversight over the out-of-control Justice Department, which has waged an unprecedented, unaccountable, brutal war on whistleblowers and hackers, and to create something akin to the Church Committee to investigate the improper monitoring and targeting of hackers, whistleblowers, Occupy participants, journalists, and a numerous other groups of non-violent “offenders” who’ve done nothing to harm anyone or the country, and have been acting purely in the public interest.
It would be a good start (though SJC Chairman Patrick Leahy has been lax in examining any Obama Administrations abuses).
But there is one action Obama could take today that would both address some of the problems with his dysfunctional DOJ and attest he means to change things systematically: Fire DOJ’s Criminal Division head, Lanny Breuer.
Lanny Breuer is not the only reason Obama’s DOJ has been so aggressive (though he has been instrumental in ensuring it ignores bank crimes). There are far more senior and far less senior people who have fostered DOJ’s overreach. But Breuer runs this system. Moreover, as the head of this system of prosecutorial overreach, he has actually explicitly rewarded abuse.
If we want to fix the injustice that was done to Aaron Swartz, we need to fix the aspects of the system that rewarded such behavior. We need to fix the law that empowered the prosecutors gunning for him. We need to put some breaks on DOJ’s power. And we should start by getting rid of the guy who has fostered this culture of abuse for the last four years.
Back when DOJ’s head of criminal prosecutions, Lanny Breuer, let HSBC off without indictments, I noted that he didn’t even mention HSBC’s significant ties to funding terrorists.
When it came to one of the world’s biggest banks, the Assistant Attorney General chose to simply ignore the threat DOJ’s been singularly dedicated to defeating since 9/11, terrorism.
But the Statement of Facts on the HSBC settlement wasn’t quite as reticent as Breuer himself. It said this about HSBC’s ties to terrorist financing:
In addition to the cooperative steps listed above, HSBC Bank USA has assisted the Government in investigations of certain individuals suspected of money laundering and terrorist financing.
That is, the court documents on the settlement talk about HSBC helping to investigate terrorist financing, rather than HSBC playing a key role in making up to a billion dollars available for terrorist financing. DOJ turned HSBC’s complicity in the central threat of our time into purported assistance pursuing it.
Poof! DOJ turned a criminal bank into a law enforcement partner, all through the secret exercise of so-called prosecutorial discretion.
Which is important background for the story about DOJ with which NPR’s Carrie Johnson has begun the year, describing how Lanny Breuer is asking banks–the same banks who crashed the economy with a bunch of criminal scams that have gone unpunished–to serve as “quasi cops.”
Every year, banks handle tens of millions of transactions. Some of them involve drug money, or deals with companies doing secret business with countries like Iran and Syria, in defiance of trade sanctions.
But if the Justice Department has its way, banks will be forced to change — to spot illegal transactions and blow the whistle before any money changes hands.
But [former OCC head Eugene] Ludwig, who now consults for banks at the Promontory Financial Group [which makes huge money not finding crimes for the banks], says prosecutors and bank regulators can’t catch all the fraud, so they’re depending on the banks themselves to do a better job.
“Banks are not set up historically really to be kind of quasi law enforcement enterprises, which is really what the U.S. government’s asking of them,” he says.
Every time a financial institution makes a fix, criminals try to work around it. Ludwig calls it a cat-and-mouse game. “Fair or not, it’s what the government is demanding of our enterprises, and everybody has to face up to that reality, I think,” he says.
Ludwig may be publicly complaining. But his firm has already gotten consulting fees to hide the scale of Standard Chartered Bank’s fraud, and the government is about to give up on the badly-conflicted foreclosure abuse review for which Promontory consulted with Bank of American and Wells Fargo. It seems clear that Promontory will get rich whitewashing bank crimes so Lanny Breuer can pretend banks are cops, not robbers.
But that’s not the most lucrative scam here. After all, HSBC was able to reap billions because it served a key role in providing cash that went, in part, to terrorists. And yet it, unlike Muslim men, seems guaranteed under Lanny Breuer to wipe that slate clean by flipping on their former clients at a convenient time (and given that DOJ has taken no action against Al Rajhi bank, in only a limited fashion).
All this remains unstated. In fact, I guarantee you if it were ever asked, DOJ would refuse to divulge precisely what kind of quasi cop HSBC is playing, as it could under a law enforcement exception to FOIAs. Even Carl Levin’s otherwise meticulous report on HSBC was silent about what happened when Treasury’s former Under Secretary for Terrorist Finance went to HSBC.
But as part of the scam, it appears both a criminal bank and our buddies the Saudis have avoided any punishment for funding terrorism.
Which is how it works when the crooks get deputized rather than prosecuted.
Apparently, Matt Taibbi and Glenn Greenwald and Matt Stoller and Howie Klein and I aren’t the only hippies who believe HSBC should be treated like any other legal person who helped drug gangs and terrorists launder money.
Here’s Grassley (who, as he notes elsewhere in the letter, is the Ranking Member on the Senate Judiciary Committee and has demanded a briefing):
I write today to express my continuing disappointment with the enforcement policies of the Department of Justice (Department). On December 12, 2012, the Department entered into a Deferred Prosecution Agreement (DPA) with HSBC, a global bank that has now admitted to violating federal laws designed to prevent drug lords and terrorists from laundering money in the United States. While the Department has publicly congratulated itself for this settlement, the truth is that the Department has refused to prosecute any individual employees or the bank responsible for these crimes. This troubling lack of real enforcement will have consequences for the health of our economy and the safety and prosperity of the American people.
In spite of this egregious criminal conduct, the DPA fails in finding the proper punishment for the bank or its employees. Under its terms, the DPA obligates HSBC to pay $1.92 billion to the federal government, improve its internal AML controls, and submit to the oversight of an outside monitor for five years. Despite the fact that this is a “record” settlement, for a bank as gigantic as HSBC this is hardly even a slap on the wrist. It only amounts to between 9 and 11% of HBSC’s profits last year alone, and is a bare fraction of the sums left unmonitored.
Even more concerning is the fact that the individuals responsible for these failures are not being held accountable. The Department has not prosecuted a single employee of HSBC—no executives, no directors, no AML compliance staff members, no one. By allowing these individuals to walk away without any real punishment, the Department is declaring that crime actually does pay. Functionally, HSBC has quite literally purchased a get-out-of-jail-free card for its employees for the price of $1.92 billion dollars.
Past settlements with large banks prove that they do nothing to change what appears to be a culture of noncompliance for some businesses.According to the U.S. Sentencing Commission, jail time is served by over 96 percent of persons that plead or are found guilty of drug trafficking, 80 percent of those that plead or are found guilty of money laundering, and 63 percent of those caught in possession of drugs. As the deferred prosecution agreement appears now to be the corporate equivalent of acknowledging guilt, the best way for a guilty party to avoid jail time may be to ensure that the party is or is employed by a globally significant bank In March 2010, the Department arranged a then-record $160 million deferred prosecution agreement with Wachovia based on its laundering of more than $110 million from Colombian and Mexican drug cartels. Officials at the time stated that “blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations.” In this case, a bank escaped with a record monetary settlement and a conspicuous absence of individuals behind bars. If the story sounds eerily similar, that’s because it is. It happened again with HSBC. [my emphasis]
And here’s Merkley (who is on the Senate Banking Committee):
I do not take a position on the merits of this or any other individual case, but I am deeply concerned that four years after the financial crisis, the Department appears to have firmly set the precedent that no bank, bank employee, or bank executive can be prosecuted even for serious criminal actions if that bank is a large, systemically important financial institution. This “too big to jail” approach to law enforcement, which deeply offends the public’s sense of justice, effectively vitiates the law as written by Congress. Had Congress wished to declare that violations of money laundering, terrorist financing, fraud, and a number of other illicit financial actions would only constitute civil violations, it could have done so. It did not.
According to the U.S. Sentencing Commission, jail time is served by over 96 percent of persons that plead or are found guilty of drug trafficking, 80 percent of those that plead or are found guilty of money laundering, and 63 percent of those caught in possession of drugs. As the deferred prosecution agreement appears now to be the corporate equivalent of acknowledging guilt, the best way for a guilty party to avoid jail time may be to ensure that the party is or is employed by a globally significant bank. [my emphasis]
Note, unlike Lanny Breuer, both Senators mention terrorism (though Merkley seems unaware how serious HSBC’s ties to Islamic terrorist financing are).
More importantly, they sound like the rest of us dirty hippies, making the audacious argument that banks ought to be subject to laws.
I noted last week how prosecutors were claiming they were being extra tough on HSBC for all its money laundering because of the seriousness of the charge they were going to defer: money laundering. Yesterday, with great fanfare, DOJ rolled out their deferred prosecution for money laundering, as if it were a good thing to ratchet up the charges you excuse.
But I was struck even more by how DOJ treated HSBC’s crimes they chose not to indict. Here’s how Assistant Attorney General Lanny Breuer described HSBC’s crimes:
HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries.
From 2006 to 2010, the Sinaloa Cartel in Mexico, the Norte del Valle Cartel in Colombia, and other drug traffickers laundered at least $881 million in illegal narcotics trafficking proceeds through HSBC Bank USA. These traffickers didn’t have to try very hard. They would sometimes deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows in HSBC Mexico’s branches.
In total, HSBC Bank USA failed to monitor over $670 billion in wire transfers from HSBC Mexico between 2006 and 2009, and failed to monitor over $9.4 billion in purchases of physical U.S. dollars from HSBC Mexico over that same period.
In addition to this egregious lack of oversight, from the mid-1990s through at least September 2006, HSBC knowingly allowed hundreds of millions of dollars to move through the U.S. financial system on behalf of banks located in countries subject to U.S. sanctions, including Cuba, Iran and Sudan. On at least one occasion, HSBC instructed a bank in Iran on how to format payment messages so that the transactions would not be blocked or rejected by the United States.
That is, Breuer says HSBC 1) helped Mexican drug cartels launder money and 2) helped Cuban, Iranian, and Sudanese banks avoid US sanctions.
But that’s not all, according to the Permanent Subcommittee on Investigations, that HSBC did. The four main sections of the PSI report on HSBC’s Bank Secrecy Act and money laundering violations pertain to:
One of the things, according to Carl Levin, that HSBC did was help banks involved in terrorist financing get US dollars (that section takes up 53 pages of a 340 page report). And yet, Breuer’s speech did not once mention the word terrorism. The US Attorney’s release used the word “terror” once, though not in conjunction with HSBC. And the Statement of Facts mentions terrorism in conjunction with a description of the laws HSBC violated and in this one paragraph.
In addition to the cooperative steps listed above, HSBC Bank USA has assisted the Government in investigations of certain individuals suspected of money laundering and terrorist financing.
In short, Lanny Breuer and his prosecutors did not mention that this bank they were letting off without prosecution provided a terrorist-connected bank with US dollars for years.