Prosecutors To Focus On Financial Fraud

“It will be a top priority of the Justice Department to hold accountable executives who have engaged in fraudulent activities.”

-Justice Department spokesman Matthew A. Miller

As opposed to the attitude towards investigating the abuses of the Bush Administration, it seems that the Obama Administration is foregoing the Establishment-favored "Lets not bicker over who killed who" approach and is gung ho for prosecuting financial fraud:

Spurred by rising public anger, federal and state investigators are preparing for a surge of prosecutions of financial fraud. Across the country, attorneys general have already begun indicting dozens of loan processors, mortgage brokers and bank officers. Last week alone, there were guilty pleas in Minnesota, Delaware, North Carolina and Connecticut and sentences in Florida and Vermont — all stemming from home loan scams.

With the Obama administration focused on stabilizing the banks and restoring confidence in the stock market, it has said little about civil or criminal charges at the federal level. But its proposed budget contains hints that it will add to this weight of litigation, including money for more F.B.I. agents to investigate mortgage fraud and white-collar crime, and a 13 percent raise for the Securities and Exchange Commission.

. . . “It’s clear that [Attorney General Eric Holder] and other top-level members of the Obama administration want to seize the opportunity to send a message of zero tolerance for mortgage fraud,” said Connecticut’s attorney general, Richard Blumenthal, who attended a meeting with Mr. Holder and a number of state attorneys general last week in Washington. “The only question is when and how they will do it.”

but what about the big fish?

With all the state activity and portents of a new resolve at the federal level, lawyers who defend white-collar clients sense growing momentum to perp walk and prosecute executives involved in the mortgage meltdown. “It’s going to be open season,” says Daniel M. Petrocelli, a defense lawyer whose clients include Jeffrey K. Skilling, the former chief executive of Enron. "You’ll see a lot of indictments down the road, and you’ll see a lot of prosecutions that rely on vague theories of ‘deprivation of honest services.’ "

Many financial executives have hired lawyers in the last few months, either through in-house counsels or, more discreetly, on their own, several lawyers who defend white-collar clients said. While assorted Wall Street executives have been prosecuted over the years, any concerted legal attack on the financial sector would have little precedent.

Could this be a stimulus designed for the white collar criminal law bar?

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    Hmmm ... (5.00 / 3) (#1)
    by Robot Porter on Wed Mar 11, 2009 at 06:06:44 PM EST
    Could this be a stimulus designed for the white collar criminal law bar?

    And I thought I was cynical.


    An envious civil litigator (5.00 / 1) (#2)
    by Big Tent Democrat on Wed Mar 11, 2009 at 06:07:27 PM EST
    Full employment for deputy (5.00 / 1) (#3)
    by oculus on Wed Mar 11, 2009 at 06:14:55 PM EST
    attorneys general.

    I know this is selfish (5.00 / 1) (#20)
    by jbindc on Thu Mar 12, 2009 at 07:54:42 AM EST
    But, as an attorney who does document review in DC, this is excellent news for me and the people I work with.  This could mean full employment for years to come.

    It's a kind of employment I don't mind (5.00 / 0) (#23)
    by Militarytracy on Thu Mar 12, 2009 at 09:36:41 AM EST
    paying for for years to come either.

    Not tempted (none / 0) (#4)
    by Big Tent Democrat on Wed Mar 11, 2009 at 06:18:02 PM EST
    While hiring more lawyers is good, they really (5.00 / 3) (#8)
    by steviez314 on Wed Mar 11, 2009 at 06:30:05 PM EST
    need more experienced investigators/analysts, like a Markopolis.

    There are many semi/retired Wall St guys who are just so pissed off at what was and is being done on Wall St who could be of great use.

    I have been an option trader for 25 years, and in 5 minutes I could have figured out that Madoff's strategy was full of crap.  Get experienced people in finance to investigate, then send it to the prosecutors.

    The SEC's excuse was that there were two sets of books, and they were shown the fake ones.  YOU SHOULD ALWAYS PRESUME THERE ARE 2 SETS OF BOOKS, and try to figure out how they faked what you are seeing.  If it all turns out to be kosher, no harm done.


    Financial Terrorism is what ... (5.00 / 3) (#15)
    by santarita on Wed Mar 11, 2009 at 07:53:00 PM EST
    has happened.  The Wall Street firms' and large banks' senior management and boards together with regulators and legislators who looked the other way while the looting was going on have destroyed trillions of dollars of wealth and the reputation of the US, to boot.  

    This is what my husband says as well (5.00 / 0) (#22)
    by Militarytracy on Thu Mar 12, 2009 at 09:34:21 AM EST
    and because they have in ways compromised national security my husband calls them domestic terrorists :)

    I have no clue (none / 0) (#10)
    by Big Tent Democrat on Wed Mar 11, 2009 at 06:32:11 PM EST
    We have prosecutors amongst us who actually know what to do.

    I thiught this story would be of interest to some of our readers and it gave me excuse to link to a Monty Python Holy Grail clip.


    But...but.... (none / 0) (#5)
    by oldpro on Wed Mar 11, 2009 at 06:25:12 PM EST
    of course, the cut in pay isn't tempting, but you could personally send some of the bad guys up the river!

    I see BTD as a possible elected (none / 0) (#6)
    by oculus on Wed Mar 11, 2009 at 06:27:15 PM EST
    attorney general.  For example, in CA Bill Lockyer and Jerry Brown have both made some memorable public statements.  

    I could enforce (none / 0) (#9)
    by Big Tent Democrat on Wed Mar 11, 2009 at 06:30:41 PM EST
    the dog catching laws I think, but the electorate thing? Can't get 3 cats to vote for me.

    Sure you could, (none / 0) (#17)
    by NYShooter on Thu Mar 12, 2009 at 12:08:30 AM EST
    just give'm your patented, "YOU DON'T KNOW WHAT YOU'RE TALKING ABOUT!"

    I bet you'd rather be Commissioner of the SEC. (none / 0) (#11)
    by steviez314 on Wed Mar 11, 2009 at 06:32:25 PM EST
    And I don't mean the government one.

    Prresident of College Football (none / 0) (#12)
    by Big Tent Democrat on Wed Mar 11, 2009 at 06:33:18 PM EST
    Pick me Barack!! I'll fix it.

    I'd like to see jail time for... (5.00 / 4) (#7)
    by santarita on Wed Mar 11, 2009 at 06:29:30 PM EST
    some CEOs and boards of directors and also fines that are not payable by their insurance carrier but I believe the test for that would be wilful misconduct or gross negligence instead of just simple negligence.  

    That may be the problem (5.00 / 2) (#13)
    by oldpro on Wed Mar 11, 2009 at 06:36:22 PM EST
    if their insurance carrier is AIG.

    I Was Thinking About That... (none / 0) (#14)
    by santarita on Wed Mar 11, 2009 at 07:44:25 PM EST
    the claims on those policies would add to AIG's woes and since we taxpayers own a large chunk of the stock of AIG, I don't want to see  AIG harmed.

    I would like to see its board in jail, though.  


    You bet. Put it on the wish list. (none / 0) (#18)
    by oldpro on Thu Mar 12, 2009 at 01:07:02 AM EST
    Perhaps we could start with financial fraud (5.00 / 1) (#24)
    by Militarytracy on Thu Mar 12, 2009 at 09:38:36 AM EST
    and find ourselves within a social wave of "general" accountability being sought.  A girl can hope.

    Only executives! (2.00 / 1) (#16)
    by Abdul Abulbul Amir on Wed Mar 11, 2009 at 08:56:30 PM EST

    Why exclude those borrowers that provided fraudulent income statements?  

    Nah...jailing people for lying (none / 0) (#19)
    by oldpro on Thu Mar 12, 2009 at 01:09:00 AM EST
    will never end.

    Besides, it's the bank's job to check...get past IRS copies...call their employer, etc.


    So (none / 0) (#29)
    by Abdul Abulbul Amir on Thu Mar 12, 2009 at 05:29:07 PM EST
     cleverly defrauding the lender deserves no law enforcement interest whatsoever!  That seems like bad public policy.

    This is the moment and it is ugly (none / 0) (#21)
    by joze46 on Thu Mar 12, 2009 at 08:24:10 AM EST
    A tough ideal to accept is that this banking mischief or now what we call banking or business fraud has been with us for about a century now. It is called the concept of the America's Central Banking system, or simply our concept of the Federal Reserve System.

    It is a very covered up truism that this system, originally designed for the rich does not actually work for them any longer. Given the transparency of the Internet, they corporate America with ties to the Federal Reserve did have an endless money stream, free money, using the claim that, at a point business is too big to fail. This is absurd. The Federal Reserve way over due for an accounting audit likely will reveal decades long political flim flam at the expense of the American tax payer.    

    Conceived decades ago by seriously rich and powerful these entities had little concern for the masses of the electorate. For those in know and it is wide spread knowledge in the elite media and powerful corporate and political circles that these rich families secretly gathered at what was called the Jekyll Island, the Hunt Club, membership was by inheritance only.

    Here, secrecy inevitability leads to conspiracies. And America has a whopper now. Rothschild of Paris, a London connection and much more all leading to that ideal the Federal Reserve is very biased by foreign entities.

    Anyone can do a Google to find more updated research into the origination of this Jekyll Island membership by inheritance only. The conclusion can be the same for all Americans and even Osama Bin Laden who was given the opportunity the attend Harvard likely saw the abuse in the American money system. With a Wahabbi hatred seized the opportunity with Bush and Company always giving favors for the Bin laden family to hold the door open in what one could can consider a best friend double cross anyone could make in politics, making a plan to expose America's rich Jekyll island scheme, the real goal to destroy America financially.

    Surf around and you will find that even Ron Paul concludes the Federal Reserve is unconstitutional.

    Federal Reserve proposal was unconstitutional from its inception, because the Federal Reserve System was to be a bank of issue. Article 1, Sec. 8, Par. 5 of the Constitution expressly charges Congress with "the power to coin money and regulate the value thereof." Warburg's plan would deprive Congress of its sovereignty, and the systems of checks and balances of power set up by Thomas Jefferson in the Constitution would now be destroyed. Administrators of the proposed system would control the nation's money and credit, and would themselves be approved by the executive department of the government. The judicial department (the Supreme Court, etc.) was already virtually controlled by the executive department through presidential appointment to the bench.

    Holder, Obama's Attorney General perhaps thinking about this mess was the reason He suggested we are a nation of cowards. Maybe he is right, because these powerful people keep running free to damage the system and no one will address this.  

    Well (none / 0) (#25)
    by CST on Thu Mar 12, 2009 at 10:17:54 AM EST
    I did wanna see some heads roll.

    I have to admit - this might feel really good.

    Unless they go after... (none / 0) (#26)
    by kdog on Thu Mar 12, 2009 at 10:27:14 AM EST
    financial crime like they go after drug crime, in which case we'll have a bunch of administrative assistants sitting in cages while the kingpins skate.

    This is the American justice system we're talking about here.


    I always thought (none / 0) (#27)
    by CST on Thu Mar 12, 2009 at 10:33:38 AM EST
    That was cuz the big fish in the drug war have armies and are camped out in places we can't go.

    The financial kingpins may have armies of lawyers, but that's somehow less terrifying than a bunch of guys with AKs.


    I was thinking domestic kingpins.... (5.00 / 1) (#28)
    by kdog on Thu Mar 12, 2009 at 10:51:02 AM EST
    who have names to give to the feds...the lowest on the totem pole don't know the particulars and hence have nothing to offer prosecutors in exchange for a walk or reduced sentence.

    The masterminds of big-time financial crime are generally smart enough to have a patsy standing by to pin it on....Madoff being an exception, unless he's the patsy for the Russian mafia or something...who knows how far this rabbit hole goes.