>Prosecutors in New York said the company operated as “the financial hub for cyber criminals around the world.”
Well fortunately for the cyber criminals, I have some great suggestions for alternative banking solutions. Plus! Your co-conspirators will almost definitely never face a day in jail.
Think you will have to pay for expensive flights to Switzerland to open your account? Save some of that hard earned cash and just take a walk to your nearest high street.
HSBC 2012 - $1.9b fine for laundering Mexican drug money.
BNP Paribas - $9b, violating international sanctions
PPI - £23b, multiple banks
Around $240b worth of fines between 2009-2013. Some of which can be put down to incompetence. Most of which can be put down to outright criminal fraud.
There's this trope about us choosing to not throw people in jail but its just a consequence of needing real evidence against a person.
Holder made some ckmment to the line of " if we had the evidence , people at the DOJ would be rushing to charge. Throwing a Wall St exec in jail is a career-making case" (edit: actual quote https://mobile.twitter.com/lauraolin/status/7279880874149847... )
The interests are totally aligned for the DOJ to crush any execs found of willful wrongdoing
"Prosecutors may consider the collateral consequences of a corporate criminal conviction in determining whether to charge the corporation with a criminal offense. Virtually every conviction of a corporation, like virtually every conviction of an individual, will have an impact on innocent third parties." [0]
Eric Holder in 2013:
"I am concerned that the size of some of these institutions becomes so large that it does become difficult to prosecute them." [0]
> if we had the evidence
In reference to Goldman/SEC settlement over Abacus:
"Nor had they questioned top bankers in Goldman’s mortgage businesses or any of the bank’s senior executives. Even more surprising to Kidney, the agency had not taken testimony from John Paulson, the key figure at his eponymous hedge fund." [1]
An investigator that doesn't ask questions will have a hard time finding evidence.
> every conviction of a corporation [...] will have an impact on innocent third parties"
Well there's your problem right there! Leave the corporations alone, along with most of the innocent shareholders and employees. Charge only the criminals as individuals, on up to the CEO. Jail, big fines, asset seizures.
How come we could find that evidence for all sorts of people, up to and including CEOs, after the S&L crisis? DOJ chose not to prosecute because of what? The way to do it is to pick a small fish, roll him, roll the guys he implicates, etc. Worked then, would have worked now.
> How come we could find that evidence for all sorts of people, up to and including CEOs, after the S&L crisis?
The perspective of Bill Black, senior regulator and litigator during the S&L crisis:
"So at the peak of the savings and loans crisis — again, one-seventieth the size of this crisis — of those 2,300 total FBI agents, 1,000 of them were working on just one industry, the savings and loan industry, to produce that incredible wave of success that we had. As recently as fiscal year 2007, there were only 120 FBI agents assigned to mortgage fraud, and that’s despite the fact that the FBI itself, in September 2004, warned that there was an epidemic of mortgage fraud — ‘epidemic’ was their word — and predicted that it would cause a financial crisis — ‘crisis’ was their word — unless it was stopped."
"And what people don’t understand about the criminal justice system is there are roughly a million people employed in it — and of course, millions incarcerated in it. But of the million employees, 2,300 do elite white-collar investigations. And of those 2,300, you have to contrast that to the number of industries in the United States, which is over 1,300."
> "Those are career-making cases. Those cases are your ticket. The fight would have been over who got to try them. We just didn’t have the evidence." - Holder
Yeah, well, not prosecuting those cases and then going into the private sector to defend those same types of infamous corporations, is apparently a $4 million/yr. career ticket too.[1]
I'd say there'd be a certain glamor and having your name go in the history books by winning one of those cases, but clearly there are other "career-making" choices.
No, if this was an accident then many people were criminally negligent.
Start prosecuting them for failing to ask the right questions and see if they start implicating others to save themselves. (ie, normal prosecutorial procedure.)
To pick one example, what did JPM do that involved "outright criminal fraud?" Give specific examples that a jury would convict for, keeping in mind that knowledge and intent must be proved beyond a reasonable doubt.
If I had to guess, what made this case easy was the fact that the guy left the country under circumstances where it could be inferred he know he was facilitating illegal transactions. That was the key element missing in, for example , the HSBC prosecution.
> Give specific examples that a jury would convict for, keeping in mind that knowledge and intent must be proved beyond a reasonable doubt.
Knowledge and intent aren't needed for RICO prosecutions. 120 'gang members' just got arrested in the Bronx and sent to prison. Some of them probably didn't even know they were in a gang, and some of them were already in prison when the alleged crimes were committed. Doesn't matter.
It would be trivial to get convictions if the government wasn't also in on the crimes.
RICO has a "conduct" predicate, which requires the prosecutors to prove beyond a reasonable doubt that the defendant had a part in directing the affairs of the criminal enterprise itself.
"faced a life term before pleading guilty just days before a trial, striking a deal"
I don't see a jury and it wasn't proven beyond a reasonable doubt either. He simply decided a plea deal was a more likely better outcome.
So how is it that prosecutors can't conjure up a single case against a top exec, slap together a long list of charges and get a plea deal out? This is pretty much their job description nowadays. Juries don't enter into it.
You can't bring a case if you don't think you can get a jury conviction. It's unethical. Prosecutors brought two Bear Stearns executives to trial near the beginning of the financial crisis and they were acquitted.
Of course it is unethical, as is piling on 20+ separate charges for a single act and then doing a plea deal for one.
That's the point: if you are being unethical already, does it hurt you to occasionally steamroll someone higher up the food chain in the same manner? That's just keeping the peace.
But to ignore vast abuses on the one side, and then list everything out of the UN charter when it comes to why you can't prosecute bank executives - come on..
I agree piling on charges just in hopes of extracting a plea deal is unethical.[1]
However you're talking about a totally different sort of unethical prosecution. When the government steamrolls a drug dealer, they have a ton of physical evidence of an illegal act. You can debate whether those acts should be illegal, or the justice of the sentences, but a jury would definitely convict on the basis of the evidence.
What you're talking about is charging people for crimes when you can't even articulate what specific acts they did were illegal or present concrete evidence of illegal acts a jury could convict on.
[1] A lot of that practice was the result of DOJ policies that required prosecutors to bring charges to maximize the sentence. Obama recently eliminated that policy allowing prosecutors to use their discretion.
I'd approve putting CEOs and hierarchies of managers in jail, I mean as long as jail is applied to the lowly anyway. I wonder what's the point where it starts hurting the economy. After all, having 6% of the black population, 2% of Hispanic and 1% of the white population [1] must have significant effect on the industry; but if managers faced a chance of an exit through jail, would it hurt the economy? After all, they don't "work", in the sense of transforming matter. They make decisions - if 1% were in jail, would we lack people who take decisions? People like the CEO of VW make unlawful decisions, killing millions. Would it give room to renew the elites, especially with people who have a sense of responsibility?
The top exec is going to have better legal representation and a lot more media attention than your average accused murderer, never mind your average person on a drugs or assault charge.
In reference to Alayne Fleischmann, JPM Chase whistleblower:
In the days leading up to Holder's November 19th announcement of the settlement, the Justice Department had asked Fleischmann to meet with criminal investigators. They would interview her very soon, they said, between December 15th and Christmas.
But December came and went with no follow-up from the DOJ. She began to wonder: If she was the government's key witness, how was it possible that they were still pursuing a criminal case without talking to her? "My concern," she says, "was that they were not investigating."
Very few of the mortgages were for financially supportable situations (ie well outside normal rent/buy price ratio) and many were on variable rate loans. It was fairly obvious to savvy real-estate investors let along trained mortgage lenders what would happen.
I saw headlines pre 2007 discussing this. We have whistleblowers testifying that they were actively warning people.
Offer immunity to the first few in trade for testimony..
There's a notable trend of US companies getting off lightly in comparison with the punishment and fines meted out to their foreign peers by the US authorities.
Beat me to it. The problem these guys had is they are not paying protection money in the form of job offers to former regulators and politicians.
Banking needs a total reform and right now. These guys are circumventing our legal systems and our democracies. They are utter filth. Their rentier activity adds nothing and takes from productive work.
Thought Bloomberg is well known to quickly publish 2 sentence articles to get an entry in google for breaking news and then back fill the story as it gets more details.
If you haven't heard of the bank in question, Liberty Reserve was bank that was heavily used to launder black market money. You could open an account with an email address, and no other documentation, deposit bitcoins, and then pull out your holdings in the form of cash or gold.
I'm surprised it ran as long as it did, from 2006 to 2013. There was one of the bulge bracket banks, I think Goldman, who put out a note about the bank where they speculated that it was an CIA front for trying to track the flow of black market cash. I'll try and see if I still have the research note around.
It was active way before bitcoin existed and their primary currency was Liberty Reserve Dollars. You could deposit via western union or other cash deposit methods and transfer funds internationally with no questions. Bitcoin was added as another method fairly late on.
LR just provided the ledger, you bought in and cashed out through 3rd party exchangers who were supposed to do all the KYC checking. LR also would freeze any account that moved more than some arbitrary amount that I can't remember but you could open pretty much unlimited accounts with slightly different info to keep under the limits. They weren't as bad as the DoJ claims unless there was private side dealing they discovered.
When the exchangers started allowing Visa/MC ATM card loads is when all the org crime flocked to LR to cash out their stolen db sales and attention from DoJ started.
> You could open an account with an email address, and no other documentation, deposit bitcoins, and then pull out your holdings in the form of cash or gold.
That alone is not a bad thing. Why shouldn't you have freedom and privacy with your money?
I know very well that draconian banking control is how some crimes are solved or some crimes avoided. That's how it works currently, but it doesn't have to be that way. Was the world really awash in crime before Know Your Customer, Currency Transaction Reporting, and all the other controls came into existence in the last 30 years?
I don't believe it has to be tied to specific trends in crime. Only a few random but well covered stories of crime is enough to persuade the public into handing over more power and calling for new stronger laws.
Publishing a fleshed out version of the story after doing the brief "BREAKING NEWS" one (like the NYT usually does, for example) is very different from backfilling the original brief entry, which is what commenter is accusing Bloomberg of doing.
Bitcoin was just staring out back then and was barely worth anything, also there was no Bitcoin deposit option one had to use exchangers back then, I lost 700 usd back then after getting paid for a design job,should have asked for bitcoin and be a millionaire now. Lr were more reliable than PayPal who hate freelancers.
Seems like nonsense witchhunt based on three numbers:
"The estimated amount of money laundered globally in one year is 2 - 5% of global GDP[1]"
"...government charges, Liberty Reserve processed 55 million separate financial transactions and laundered $6 billion in criminal proceeds. [2]" (I assume they just summed up total amount of transactions here, just because they can...)
"Budovsky admitted in his plea agreement to laundering more than $250 million in criminal proceeds. [3]"
So, $250 mil. is 4% of $6 bn. Which is within normal range of money laundering rates.
He's getting it probably because he wasn't licensed and wasn't giving up data, or something like that.
Not only was this a nonsense witch hunt by prosecutors, but it was also a continuation of the war on cash. The government and the police do not like cash, they desperately want an all plastic transaction society, and have been using laws like civil procedure to attack the the cash-based system for many years. If you know nothing of civil forfeiture you owe it to yourself to read up on it. Simply put: If the police find a large amount of cash on you, they can take it, without a warrant, without conviction, and you will have to sue to get it back.
The title should really be changed to "Liberty Reserve" rather than the shameless government propaganda from Bloombag.
Bitcoin, lacking untracability, will eventually just decay into the same non-fungible identity-dependent status quo. But the lack of direct persecution like LR/egold/etc really highlight its one technological achievement.
Wondering how I can get my money back from this, lost a few grand (legal money) that I deposited just before they got shut down. Saw a vague allusion to contact SDNY about it (only found a mailing address) and haven't seen anything else since.
Was a decent bit of collateral damage since they were fairly popular for offshore forex and bitcoin.
That heavy jail sentence while HSBC got a "slap on the wrist", paying their way out of a criminal indictment [1].
> The settlement, announced December 11, 2012, included a $1.256 billion forfeiture and $665 million in civil fines.
> It resolved charges accusing HSBC of having degenerated into a "preferred financial institution" for Mexican and Colombian drug cartels, money launderers and other wrongdoers through what the U.S. Department of Justice called "stunning failures of oversight."
(...)
>The deferred prosecution agreement, known as a DPA, lasts for five years, and prosecutors may indict the bank if it violates the terms.
> Gleeson said "much of what might have been accomplished by a criminal conviction has been agreed to in the DPA," whose administration he will supervise.
> He noted having received requests from the public to reject the agreement because it did not hold HSBC criminally liable. He also read numerous editorials and columns suggesting, as one put it, that HSBC was "too big to indict."
I haven't read the indictment in this case, but HSBC didn't merit jail time for anyone in the U.S. The DOJ had no evidence that anyone in the U.S. at HSBC actually knew about specific money laundering transactions. The charge was based on inadequate controls. That's the classic case for a fine as opposed to jail time.
It's not illegal for your bank to be used for money laundering. Every bank is used by money launderers. And every U.S. bank knows, in the abstract, its branches are used to launder money. Read the money laundering statue: https://www.law.cornell.edu/uscode/text/18/1956. It requires transferring money with either: a) intent to promote illegal activity; or 2) knowing that the transaction is designed to conceal unlawful activity.
AML/KYC is inevitable in a collectivist system. Centralization requires the state to attempt to know everything about everyone, which is impossible, and leads to collapse.
Well fortunately for the cyber criminals, I have some great suggestions for alternative banking solutions. Plus! Your co-conspirators will almost definitely never face a day in jail. Think you will have to pay for expensive flights to Switzerland to open your account? Save some of that hard earned cash and just take a walk to your nearest high street.
HSBC 2012 - $1.9b fine for laundering Mexican drug money.
JPMorgan - $13b aggressive, irresponsible mortgage lending
Bank of America - $16b ditto
Libor rate fixing - $3b, multiple banks
Forex rigging - $2b, multiple banks
BNP Paribas - $9b, violating international sanctions
PPI - £23b, multiple banks
Around $240b worth of fines between 2009-2013. Some of which can be put down to incompetence. Most of which can be put down to outright criminal fraud.
Play it fair with sentencing please.