by Sharon Noonan Kramer
On November 6, 2014, Rolling Stone published an excellent article by Matt Taibbi. The article is titled, “The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare“
The article’s gist is of a Canadian woman who knows how to cause those responsible for the multi-billion dollar mortgage defrauding to finally face criminal charges in the United States; and what has been done by the U.S. Department of Justice (DOJ) to keep what she knows concealed in the courts, so that no criminal prosecutions ever occur.
This expose’ really struck a chord with us. We completely understand Mr. Taibbi’s point that the real story is not the fraud itself. The real story is the cover-up of how insidious the fraud really is; and how those who have despicably fleeced the public continue to profit from unconscionable under the color of law acts of the DOJ, et.al., as thousands of U.S. citizens continue to suffer from the fallout.
We at Katy’s know and can prove that this is not the only instance in which bad actors at the DOJ and friends have been lying and shielding those who have committed criminal acts to fleece the United States public of billions of dollars. People have been permanently disabled and some have died from the retalitory criminal acts to conceal what we know from coming to public light. Not one person has been punished for the collusion to defraud by contractors of the DOJ, et.al., in ten years of lying and falsifying court documents in California, to cover-up scientific fraud in U.S. public health policies and courts all across the nation.
“Everything that I thought was bad at the time turned out to be a million times worse…I tried to go on with the things I was doing, but I just stopped sleeping and couldn’t eat.” Whistleblower Alayne Fleischmann
“Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.” Matt Taibbi
Below are key excerpts of Mr. Taibbi’s excellent Rolling Stone article:
Alayne Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JP Morgan Chase CEO Jamie Dimon late last year paid $9 billion…to keep the public from hearing.
In today’s America, someone like Fleischmann – an honest person caught for a little while in the wrong place at the wrong time – has to be willing to live through an epic ordeal…. And when she finally gets there, she still has to risk everything to take that last step. “The assumption they make is that I won’t blow up my life to do it,” Fleischmann says. “But they’re wrong about that.”
That’s when she decided to break her silence. “I tried to go on with the things I was doing, but I just stopped sleeping and couldn’t eat,” she says. “It felt like I was trying to keep this secret and my body was literally rejecting it.”
“Everything that I thought was bad at the time,” Fleischmann says, “turned out to be a million times worse.”
She’s had to struggle to find work despite some striking skills and qualifications, a common symptom of a not-so-common condition called being a whistle-blower.
Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.
“It used to be if you wrote a memo, they had to stop, because now there’s proof that they knew what they were doing,” she says. “But when the Justice Department doesn’t do anything, that stops being a deterrent. I just didn’t know that at the time.”
In February 2008, less than two years after joining the bank, Fleischmann was quietly dismissed in a round of layoffs. A few months later, proof would appear that her bosses knew all along that the boom-era mortgage market was rotten.
She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up.
Fleischmann later realized that the government wasn’t interested in having her testify against Chase in court or any other public forum. Instead, the Justice Department’s political wing, led by Holder, appeared to be using her, and her evidence, as a bargaining chip to extract more hush money from Dimon. It worked. Within weeks, Dimon had upped his offer to roughly $9 billion.
The newspapers and the Justice Department described the deal as a “$13 billion settlement,” hailing it as the biggest white-collar regulatory settlement in American history. The deal released Chase from civil liability. And, in what was described by The New York Times as a “major victory for the government,” it left open the possibility that the Justice Department could pursue a further criminal investigation against the bank. But the idea that Holder had cracked down on Chase was a carefully contrived fiction, one that has survived to this day.
“They typically charge only one offense when there are dozens. It would be like charging a serial murderer with a single assault and giving them probation,” says Dennis Kelleher of the financial reform group Better Markets.
Instead of a detailed complaint naming names, Chase was allowed to sign a flimsy, 10-and-a-half-page “statement of facts” that was: (a) so short, a first-year law student could read it in the time it takes to eat a tuna sandwich, and (b) so vague, a halfway intelligent person could read it and not know anyone had done anything wrong. The ink was barely dry on the deal before Chase would have the balls to insinuate its innocence.
Chase was allowed to treat some $7 billion of the settlement as a tax write-off. Couple this with the fact that the bank’s share price soared six percent on news of the settlement, adding more than $12 billion in value to shareholders, and one could argue Chase actually made money from the deal. What’s more, to defray the cost of this and other fines, Chase last year laid off 7,500 lower-level employees. The board awarded a 74 percent raise to the man who oversaw the biggest regulatory penalty ever, upping his compensation package to about $20 million.
In September, at a speech at NYU, Holder defended the lack of prosecutions of top executives on the grounds that, in the corporate context, sometimes bad things just happen without actual people being responsible. “Responsibility remains so diffuse, and top executives so insulated,” Holder said, “that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.”
In other words, people don’t commit crimes, corporate culture commits crimes! It’s probably fortunate that Holder is quitting before he has time to apply the same logic to Mafia or terrorism cases.
Or, as Fleischmann translates it, [Holder said], “I will personally stay on to make sure that no one can undo the cover-up that I’ve accomplished.” Despite it all, Fleischmann still had faith that the Justice Department or some other federal agency would make things right. “I guess I was just a trusting person,” she says. “I wasn’t cynical. I kept hoping.”
Because after all this activity, all these court actions, all these penalties (both real and abortive), even after a fair amount of noise in the press, the target companies remain more ascendant than ever. The people who stole all those billions are still in place. And the bank is more untouchable than ever – former Debevoise & Plimpton hotshots Mary Jo White and Andrew Ceresny, who represented Chase for some of this case, have since been named to the two top jobs at the SEC. As for the bank itself, its stock price has gone up since the settlement and flirts weekly with five-year highs.
Holder or whoever succeeds him can still make the whole thing disappear by negotiating a soft landing for the company. “That’s the thing I’m worried about,” says Fleischmann. “That they make the whole thing disappear. If they do that, the truth will never come out.”
Truth is one thing, and if the right people fight hard enough, you might get to hear it from time to time.