Email

Crime Pays

39 | By Shah Gilani

If you didn’t catch the Frontline special, The Untouchables, on PBS last week, you should really check it out.

It’s another “What the heck is going on here?” investigation of the massive mortgage mania meltdown that begs the question: How have all of the big fish on Wall Street escaped the Justice Department’s hooks?

Lanny Breuer is the Assistant Attorney General for the Criminal Division of the Justice Department, and he’s the star of the The Untouchables. He shows the public that, basically, crime pays.

Lanny wasn’t cornered, or set up by Frontline like some Internet creep walking into a sting. He was interviewed of his own accord.

He wanted to defend his tenure at Justice and let the world know that he’s really trying, honest he is. He’s trying really hard.

Yeah, right.

He said, “Federal criminal cases are hard to bring – I have to prove that you had the specific intent to defraud… If we cannot establish that, then we can’t bring a criminal case.”

Make that tried, not trying. The day after the show aired, the Washington Post said the “division chief is stepping down.”

I haven’t seen any confirmation of that, but I did notice that some of the slickest six-figure (that’s per week) job postings at Wall Street’s biggest firms were taken down after the special aired.

Maybe those two things are connected. Maybe the common denominator is that crime does pay and that going after criminals and then not bringing criminal charges doesn’t pay – that is, until you switch sides.

We’ll just wait and see who drafts Lanny Breuer in the next episode of the Washington-to-Wall Street Lottery.

Then I got to thinking. No, I wasn’t thinking about getting one of those six-figure (per week) jobs.
I started thinking that Lanny has a point…

How do you prove intent?

If I approve you for a mortgage on a million-dollar McMansion, and you’re living in a refrigerator box, am I guilty of intending anything? Are you?

If I package your mortgage with a bunch of other similar, meticulously un-documented, thoroughly un-verified rags-to-riches loans, am I guilty of intending anything?

If I then sell those ticking time bombs to investors as AAA-rated securities – because the rating agency I paid rated it like the battery in my penlight – am I intending anything? Are the rating agencies?

You just don’t know. You can’t read my mind, or anyone else’s – including your own, for that matter.

Besides, I wasn’t the only one doing all those things. These activities were actually in job descriptions for a lot of those six-figure (per week) jobs on Wall Street. Nobody intended to blow themselves up, let alone the whole world.

It reminds me of that old Tower of Power song, It’s Not the Crime:

“It’s not the crime, and it’s not the thought. It’s not the deed, it’s if you get caught.”

These guys can’t get caught because there was no intent on their part – at least no intent that can be proven beyond the shadow of a doubt. I get that. It’s a law thing.

So, here’s the thing. We need new laws. We need laws that say, “If it walks like a duck and it talks like a duck, then it’s a duck.” And there’s no ducking out.

Maybe you can’t put people in jail for being ducks, but if they duck up, even if they didn’t intend to quack up anybody else, or the economy, or the world, to feather their own nests, then there should at least be laws that strip them of their ill-gotten gains.

After all, we should be able to prove they intended to make all that money.

As far as Wall Street goes, it sounds okay the way Tower of Power puts it:

“Ya know, the more things change, the more they stay the same…”

Best,

Shah

39 Responses to Crime Pays

  1. Casey Koehler says:

    What about the laws for Malfeasance, and Misfeasance, why can’t some of these guys be prosecuted under these crimes….at least
    you could get them out of the business for a while

  2. fallingman says:

    Uh huh. The rule of law is dead. Think that might matter to the market some day?

    You get a AAA rating for this one just for the Tower of Power references. What a band. You are the Dennis Miller of high finance.

  3. Jim says:

    Ok, you have toprove a criminal charge beyond reasonable doubt, and you have to prove ‘mens rea’ (intent). But surely there is scope for a class action for negligence!

  4. Frank B. says:

    Except this time, things aren’t going to be the same the more they change!
    Common sense is a thing of the past in the halls of govt. We need to RECYCLE congress totally!

  5. Terry says:

    Does this song apply to Benghazi as well? Or how about embezzeling SS funds and replacing them with IOUs. Also it should be kept in mind that govt makes the laws, and also enforces them and even interpretes them. Congress, executive branch and courts. And the people in PC DC have no sense of r vs w? A sense of objective wrong has been removed from where else? Govt schools. In islam everythng but islam is illegal In America a sense of r vs w is now illegal.

  6. Ray Ramirez says:

    Shah, I couldn’t agree more. But what can we do as individual investors to cause an uproar about this? The Justice Dept only acts due to a large volum of public outcry. What would you recommend?

  7. Tom S. says:

    Great – if I get pulled over for speeding the officer writing the ticket has to prove that I intended to exceed the speed limit. Of course I would never intend to do that – it just happens sometimes…

  8. Herbert Hoover says:

    ITS REFRESHING TO SOMEONE CALL THIS CROWN PRINCE OUT
    STILL ID BE WAITING FOR A KNOCK ON THE DOOR , IF YOU KEEP TELLING THE TRUTH. I MEAN WHERE DO YOU THINK YOU ARE
    BEJING, ?

  9. Donna Ward says:

    The USA Government has lost it’s true purpose (uphold the Constitution) Sending tax money it does not have misrepresents it’s citizens. Congress needs to balance the budget. Deficit spending degrades the values we hold dear. Our love for God, truth and the American pride of “we can build it”

  10. lyle dreat says:

    did you check the resume of the now leaving head of enforcement at the SEC and see what bank he came from?

    wonder where he will go

    • Marla Cowie says:

      I understand there is a class action suit against Goldman being led by the Mississippi Public Employees System thought to be ready for court in October. Google for more info. including why Goldman doesn’t think a class action suit is appropriate. Really?

  11. Tony Igwe says:

    The team that Obama put into Treasury, Justice and Economic advisers convinced me that his admin was going to be a continuation of Bush II. They haven’t disappointed.

  12. H. Craig Bradley says:

    LIFE IS NOT MONEY

    Here is a better explanation of why financial “crimes” are rarely prosecuted and won in Federal court: the financial wizards are like Al Capone. Remember in Chicago during the roaring twenties and prohibition you had widespread bribery of city officials and extortion. If you can not buy them, then kill them. It worked and to a certain extent, is still working.

    As far as “crimes” go, every state has a list of crimes called “Revised Statutes”. State criminal offenses are commonly broken up into two major criminal categories, each treated with a different sense of urgency by the criminal justice system locally at the state, city and county levels.

    One category is called ” crimes against persons”. These are the ones considered “emergencies” by 911 operators; crimes such as rape, assault, murder, robbery, criminal threats, etc. The other category are called “crimes against property” (self explanatory: theft, fraud, embezzelment, etc.).

    The criminal justice system in America almost always treats “property crimes” as less important than personal crimes, as the system only has so many resouces available for enforcement and incarceration. In these budget constrained times, it amounts to letting the bad guys off lightly, provided they do not hurt anyone (or too many people). Life is not money. That is the principle here.

      • fred stork says:

        Ray, thank you, you are the first one who said it, in decades. I knew difference between Law and Justice in post war communist country. But here it seems to escape everybody.
        A judge who stands up and says “justice has been done” is a liar.
        What is JUST is not always legal.
        What is LEGAL is not always just.

  13. Rick says:

    Gosh darn it Shah, how do you come up with the truth ALL of the time? Once again you hit it right on barrel head. And your right the US DOJ is as corrupt as h-ll, just want proof? Eric Holder AG of the USA authorized the “Fast and Furious ” gun running operation and BATF agents bought guns that were later on traced back to the USA and the agents who bought them after they were found at murder scenes in Mexico, that is all the proof I need of corruption in the US DOJ. These agents lied on the federal forms they signed and used false adresses on the federal form to buy them, that buy the way is a felony, and yet not one agent has been charged for doing so. Why?, because they would all get pardoned by the resident in the White house.

    • ray says:

      Holder should be charged as an accomplice to murder and Obama, due to his complicity by stopping further action on Holder’s records, is an accomplice as well.

  14. John O'Connell says:

    Shah, you should check out Bill Black’s blog entries at NEP. He successfully prosecuted 30,000 banksters for the same sort of control fraud in the S&L scandals of the 80′s and 90′s. He had no difficulty proving whatever needed to be proved to get criminal convictions.

  15. Larry P says:

    So, WHEN exactly did the House and Senate change the ‘burden of proof’ (portion of criminal code) to require proving ‘INTENT’ to commit a crime instead of merely proving ‘COMMISSION’ of a crime? Which members voted it into law and WHO ‘contributed’ to their ‘political’ careers? The American public needs names.

    As I recall when someone is killed by another – regardless of whether there was any ‘INTENT’ proven (or not) the victim is still DEAD. And if the killer is caught, tried and proven within a ‘reasonable doubt’ (not ‘shadow of a doubt’) – that killer would still be charged with a felony crime and sentenced to time in prison – or executed in Texas.

    I know the son of an NYPD officer who accidentally shot a friend in the head with Daddy’s service pistol. Though ‘intent’ was clearly demonstrated NOT present – the kid (18yrs+) was still sentenced to serve time in prison.

    Is Lanney merely confirming the accusations, of so many ‘conspiracy nuts’, there are 2 justice systems in the USA – one (complacent to the point of ‘accessory after the fact’) for the ‘HAVES’ and another (brutal) one for the ‘HAVE NOTS’?

    His behavior speaks volumes of the actions of federal regulators (not ‘enforcers’) who willingly participated in fraudulent investment schemes perpetrated by Pru-Bache (as in the tome ‘Serpent on the Rock’) when states AGs sought to prosecute packagers of ‘Limited Partnerships’ to poorly educated elderly Americans and Europeans during the Clinton administration.

    The Commissioner of the SEC (appointed by G.H.W. Bush) blocked release of damning evidence from his own staff to the state investigators just as Texas Governor G.W.Bush was meeting with these same fraudsters to market the Texas Rangers baseball franchise in yet another Limited Partnership.

    The same Justice Dept, under Clinton, along with NASA took a dive in the investigation of ‘criminal intent’ in the Hubble Space Telescope fraud when Janet Reno made a ‘sweetheart deal’ with the contractor of record to block any ‘Qui Tam’ suits by witnesses to the telescope’s flaws while still in the assembly phase. Testimony offered through telephone and postal communications to US Senators and the sitting President were ignored, rejected or not disclosed to investigators. NASA OIG official Lance Carrington admitted “Had we known of this offer of testimony in time we surely would have subpenaed (the witnesses). We’d have then had evidence of ‘criminal intent to defraud’ and a case for fines under the Qui Tam statute.”

    THIS fraud cost taxpayers nearly 3/4 of a billion dollars in lost fines while (1) Clinton bagged $600k in an illegal ‘contribution’ from a Chinese military officer, (2) the PLA gained telemetry technology from the contractor – enabling the contractor to launch it’s satellite-TV network and the Chinese to target any spot on the planet and (3) the contractors in the HST project gained a trump-card in the battle to approve development of a multi-trillion dollar ‘Star Wars’ missile defense system DUE to the Chinese now having the SAME technology used in US Air Force ICBMs!

    Everybody won – except the American taxpayers and uninformed investors.

    Similar ‘criminal intent’ to defraud the federal government (and taxpayers) through intentional submission of falsified financial documents (‘false or fraudulent claims for payment’) was rejected by nearly every enforcement body of the federal government when whistleblowers offered testimony and documented evidence against officials of state’s universities for coercing students into submitting ‘false claims’ (through ‘FAFSA’ applications) which would have been used to finance tuition and fees in academic ‘courses of study’ completely unrelated to their declared majors.

    In THIS scheme students in state university medical programs would be denied mandatory ‘clinical classes’ for a year or more – even after they’d completed all their academic requirements. During this time the students were STILL required to remain ‘enrolled’ and paying the university. In-order for students, demonstrating ‘financial need’, to receive federal financial aid university officials merely switched the students’ majors FROM medical programs to ANY other alternate ‘fluff program’ (arts and crafts, phys-ed, etc). When the officials deigned to allow each student into the clinical classes that student’s major was switched BACK to the medical program and they’d continue their studies to graduation.

    The fraud came in with students claiming (on FAFSA applications) their ‘intent’ to study in each major for graduation even though THEY and university officials KNEW they had absolutely no ‘intent’ to graduate from their ‘alternate’ major. For this (1) these students went thousands more dollars into debt, (2) taxpayers lost millions more dollars in education ‘grants’ (not requiring repayment) and (3) other students were denied financial aid due to lack of funds in the program.

    To WHOM can Americans look to for real ‘JUSTICE’?

    • ray says:

      Nobody, sorry to say. Both Dem. and Rep. parties are corrupt no matter who is elected. It will take time, but eventually the U.S. will fail and the regular citizens will be horribly !@#$ed, while the perpetrators will live a high life in Bali.

    • Ron says:

      THere’s a diference between a law which says, “$5.00 fine for spitting on the sidewak,” and one which says, “$5.00 fine for willfully and maliciously spitting on the sidewalk.”

    • fred stork says:

      You seem to have the “intent” thing confused. When you kill someone with intent, it’s murder 1, first degree murder, names vary, but the principle stands. When intent is proven, penalty is life or death sentence. When intent is not proven, it’s manslaughter, and sentences are much more lenient. And Criminal Negligence causing death, when death is caused by unforeseen circumstances, is even more lenient.

  16. Jane says:

    Small correction in crimminal law proving intent.
    “It’s beyond REASONABLE DOUBT Not SHADOW of doubt. And we all know how complicated the meaning of “Reasonable” can be to some members of society.

  17. Steve Lohrstorfer says:

    This is the stuff I think of when people talk about “class warfare” or my favorite,”income redistribution”. Its o.k when the wealthy redistribute from the bottom to the top even when its criminal, but its “47 % takers” when those at the middle and the bottom want their fair share of the profits.

  18. Kevin Beck says:

    I thought there were also Civil Asset Forfeiture laws.

    Oops…those laws only can be used against small-time recreational marijuana users who just happened to be driving 2 mph above the speed limit on rural roads after 11 PM.

  19. ASHLEY GOODMAN says:

    READ THE RICO STATUTES IN THE FEDERAL STATUTES AND READ HOW THE COURTS DEFINE FRAUD. IT IS A REVELATION. IT IS AN EYEOPENER. LIKE, “ANY SCHEME, OR PLAN OR ACTIVITY THAT IS INTENDED TO SEPARATE A MAN FROM IS MONEY.” IT IS SO GENERAL, YOU CAN DRIVE AN ABRAMS TANK THROUGHT THE GATE AND SNARE YOUR VICTIM. THE PROSECUTOR IS FULL OF DUNG. JUST SHOWING WHAT WHEN ON OVER A PERIOD OF MONTHS AND YEARS WOULD PROVE THE INTENTION. RICO REQUIRES TWO OR MORE SIMILIAR ACT THAT SEPERATES A PERSON FROM HIS MONEY.

  20. Mark says:

    If you can afford to buy a whole law firm they leave you alone. If you are an average joe if nothing else they win because you are bankrupt from just the arrest even if they drop the charge. The Feds went after Aaron Swartz for making a database public. He handed the Fed the death penalty because he was terrorized he might spend a long time in jail. The Feds don’t believe in States Rights the insiders are going after legal Pot growers and even the elected officials for setting up the rules.

    Look at the banks that settled cases for dealing in drug money. What no intent on the part of any of the top management.

    I hope I live to see the day that a company is sent to jail the Supreme Court ruled they are a person. I have never seen a company make a decision only the employees that run them make decisions.

  21. Simon Gatt says:

    On intention, you are wrong. Intent can be demonstrated, never beyond any doubt but definitely beyond reasonable doubt. Read, if you will, the extensive studies on intention by philosophers like GEM Anscombe, Donald Davidson or Searle. Intent is made manifest in action; if something was done once, it may have been a fluke, with an unintended outcome; if that act was then repeated despite the outcomes, then there clearly there is intention.

  22. Martin says:

    Many thanks for another great article. I don’t know the Tower of Power, but I do know they cribbed the 150-year-old adage coined by the French critic Karr: plus ça change, plus c’est la même chose…

  23. H. Craig Bradley says:

    INCOMPETENT GOVERNMENT ?

    An alternative explanation of why the U.S. Dept. of Justice failed to prosecute and incarcerate any Wall Street Executives from the 2008 financial crisis period is that the head of the Criminal Division at Justice, Assistant Attorney General Lanny A. Breuer may be an incompetent. In addition, Congress may have intentionally underfunded the FBI and Justice Dept. inorder to prevent prosecution or shield Wall Street Executives. You decide.

  24. Dan says:

    Awesome reference to T.O.P. that brings me back. Fight the Power! Right on Man! Now if we can only get a reference to those Ohio Players album covers, ooooo they were the best.

  25. Virginia says:

    I think that the government’s response to the financial crisis of 2008 is just alot of posturing and smoke and mirrors. There was no intention to prosecute the so-called wrong doers- just another performance. I have wondered what drives the CEO’s of the Banks shown in the Frontline presentation to act in such a greedy manner. Like Bernie Madoff, they seem to derive their enjoyment from out-witting others and feeling powerful and in control. It’s not the money, it’s fooling others and winning the game. The culture of Wall Street supports their actions and they are acting out of the norms of that culture. Their actions may be criminal or immoral, but they believe they are RIGHT. Breuer is either intimidated, being paid off, or truly realizes that any prosecution is a hopeless task. Blankfein is so shameless that using the 911 add-on provision of the Fiscal Cliff bill to build a new head quarters for Goldman Sachs is another icing on his cake. His beligerent attitude is another indication that he is so caught up in his games that he has lost touch with reality. No matter how many people or businesses his company hurts, no matter how much wealth is accumulated, he will never be at peace. These CEO’s may think they have won but they are the real losers. We come into the world with nothing and leave with nothing. As Wayne Dyer has stated: what can we do? Give love and be of service to mankind. I say they are losers because they are going up the wrong path.

  26. James says:

    Hi Shan,
    There was no problem taking people to court in Europe for the same behaviours. They have given out jail terms there!
    I wonder how their behaviour or laws differ. Maybe there is something to learn here!
    Also I seem to recall a number of “whistle blowers” on 60 minutes and similar shows back in 2008 & 2009 stating such things as their bosses saying if the person can fog a mirror they qualify for the loan. No good banking – great for your bonus!
    Surely these same people can be encouraged to come forward even now, to give evidence and “squeeze” others to tell what they know, or face the consequences, so as to reach the “Big Boys” eventually !??
    Just saying!.
    James

Leave a Reply

Your email address will not be published. Required fields are marked *


five + = 14

Protected by WP Anti Spam