How to Actually Prosecute the Financial Crimes of the Very Rich

[ZiprHead]

I quit the DOJ because I no longer wanted to participate in a system this permissive.

I spent 27 years fighting white-collar crime and corruption at the Department of Justice, first in the Tax Division, then in the Miami U.S. Attorney’s Office, and finally in the Criminal Division. I have witnessed firsthand precisely how unjust the American criminal-justice system can be. Practically everyone knows, on some level, that the rich get better treatment than the poor. But I saw it so clearly: The wealthy live in a different legal reality entirely, one in which blatant financial fraud routinely goes unpunished. For the poor, even the merest transgression can lead to ruined lives. This problem has always existed, but it has gotten worse—far worse—in recent years. I eventually quit the DOJ because I no longer wanted to participate in this system.

In the mid-1980s, when I worked for the Tax Division, the DOJ was prosecuting almost 8,000 white-collar criminals annually. While in Miami in the ’90s, I witnessed the DOJ’s focused commitment to rooting out high-level savings-and-loan criminals. In the early 2000s, with the formation of the Corporate Fraud Task Force, no one doubted the DOJ’s centralized effort to hold corporate executives accountable for fraud. Then it all seemed to abruptly stop. Last year saw federal criminal white-collar prosecutions drop to their lowest level ever, to about 3,500 prosecutions nationwide. Have the wealthy simply forsworn criminality? Not likely.

What I observed was a sustained erosion of coordinated focus, effective leadership, and political will. This led to a marked deterioration of the department’s ability to competently attack elite financial fraud. Congress, too, deserves some blame. For example, as recently chronicled by ProPublica, the operational demise of IRS enforcement capabilities is rooted in the failure to budget for the hiring of a sufficient number of special agents to investigate and address the depth and breadth of elite-level tax fraud. President Joe Biden’s recently proposed $80 billion IRS spending boost would be a good start, but money alone won’t solve the problem.

This decline in enforcement capacity permits corrupt autocrats and complicit bankers to launder trillions through U.S. banks. One report by the then-chair of the Wolfsberg Group, a consortium of international banks evaluating financial-crime risk, estimates that $5.8 trillion worth of financial crime was perpetrated in 2018. BuzzFeed News recently reported that from 1999 to 2017, more than 200,000 suspicious financial transactions totaling $2 trillion, some traceable to corrupt foreign oligarchs, were processed through U.S. banks. Virtually no regulatory or law-enforcement action was taken.

 

[steve_bank]

There is the traditional way.

Pitchforks in the streets. Tar and feathers. Show trials followed by hard labor in camps.

In the 90s China had a serious corruption problem as wealth gew. For a while they were liberally shooting violators with firing squads.

You can not eliminate it, but it can be kept tolerably low.

It all comes down to fear. As long as the risk reward calculation is weighted in favor of reward corruption and exploitation exist.

Complex finacial rules and tax laws are exploited to the max, legally. Here in Washington a tax on capital gains has been aproved.

People who make money on financial transcriptions do not want to be taxed. It is not just about those who violate the letter of the law. The system is expoitive and it is enshrined in tax aw.

 

[Harry Bosch]

I quit the DOJ because I no longer wanted to participate in a system this permissive.

I spent 27 years fighting white-collar crime and corruption at the Department of Justice, first in the Tax Division, then in the Miami U.S. Attorney’s Office, and finally in the Criminal Division. I have witnessed firsthand precisely how unjust the American criminal-justice system can be. Practically everyone knows, on some level, that the rich get better treatment than the poor. But I saw it so clearly: The wealthy live in a different legal reality entirely, one in which blatant financial fraud routinely goes unpunished. For the poor, even the merest transgression can lead to ruined lives. This problem has always existed, but it has gotten worse—far worse—in recent years. I eventually quit the DOJ because I no longer wanted to participate in this system.

In the mid-1980s, when I worked for the Tax Division, the DOJ was prosecuting almost 8,000 white-collar criminals annually. While in Miami in the ’90s, I witnessed the DOJ’s focused commitment to rooting out high-level savings-and-loan criminals. In the early 2000s, with the formation of the Corporate Fraud Task Force, no one doubted the DOJ’s centralized effort to hold corporate executives accountable for fraud. Then it all seemed to abruptly stop. Last year saw federal criminal white-collar prosecutions drop to their lowest level ever, to about 3,500 prosecutions nationwide. Have the wealthy simply forsworn criminality? Not likely.

What I observed was a sustained erosion of coordinated focus, effective leadership, and political will. This led to a marked deterioration of the department’s ability to competently attack elite financial fraud. Congress, too, deserves some blame. For example, as recently chronicled by ProPublica, the operational demise of IRS enforcement capabilities is rooted in the failure to budget for the hiring of a sufficient number of special agents to investigate and address the depth and breadth of elite-level tax fraud. President Joe Biden’s recently proposed $80 billion IRS spending boost would be a good start, but money alone won’t solve the problem.

This decline in enforcement capacity permits corrupt autocrats and complicit bankers to launder trillions through U.S. banks. One report by the then-chair of the Wolfsberg Group, a consortium of international banks evaluating financial-crime risk, estimates that $5.8 trillion worth of financial crime was perpetrated in 2018. BuzzFeed News recently reported that from 1999 to 2017, more than 200,000 suspicious financial transactions totaling $2 trillion, some traceable to corrupt foreign oligarchs, were processed through U.S. banks. Virtually no regulatory or law-enforcement action was taken.

No financial regulations were passed? I couldn't read the site. But must be old. There are tons of new regulations now on the banks to detect the fraud. Now the responsibility is on the teller to "know your customer". It's very cumbersome now on businesses.

 

[fromderinside]

Same old excuse. When business has to do something it's always da govnamint's fault.

A little maturity here would work wonders.

A little maturity discussing regulations would be nice, but, this is 'merica land of toy gun manners.

Think ewe verra munch

 

[ZiprHead]

I quit the DOJ because I no longer wanted to participate in a system this permissive.

I spent 27 years fighting white-collar crime and corruption at the Department of Justice, first in the Tax Division, then in the Miami U.S. Attorney’s Office, and finally in the Criminal Division. I have witnessed firsthand precisely how unjust the American criminal-justice system can be. Practically everyone knows, on some level, that the rich get better treatment than the poor. But I saw it so clearly: The wealthy live in a different legal reality entirely, one in which blatant financial fraud routinely goes unpunished. For the poor, even the merest transgression can lead to ruined lives. This problem has always existed, but it has gotten worse—far worse—in recent years. I eventually quit the DOJ because I no longer wanted to participate in this system.

In the mid-1980s, when I worked for the Tax Division, the DOJ was prosecuting almost 8,000 white-collar criminals annually. While in Miami in the ’90s, I witnessed the DOJ’s focused commitment to rooting out high-level savings-and-loan criminals. In the early 2000s, with the formation of the Corporate Fraud Task Force, no one doubted the DOJ’s centralized effort to hold corporate executives accountable for fraud. Then it all seemed to abruptly stop. Last year saw federal criminal white-collar prosecutions drop to their lowest level ever, to about 3,500 prosecutions nationwide. Have the wealthy simply forsworn criminality? Not likely.

What I observed was a sustained erosion of coordinated focus, effective leadership, and political will. This led to a marked deterioration of the department’s ability to competently attack elite financial fraud. Congress, too, deserves some blame. For example, as recently chronicled by ProPublica, the operational demise of IRS enforcement capabilities is rooted in the failure to budget for the hiring of a sufficient number of special agents to investigate and address the depth and breadth of elite-level tax fraud. President Joe Biden’s recently proposed $80 billion IRS spending boost would be a good start, but money alone won’t solve the problem.

This decline in enforcement capacity permits corrupt autocrats and complicit bankers to launder trillions through U.S. banks. One report by the then-chair of the Wolfsberg Group, a consortium of international banks evaluating financial-crime risk, estimates that $5.8 trillion worth of financial crime was perpetrated in 2018. BuzzFeed News recently reported that from 1999 to 2017, more than 200,000 suspicious financial transactions totaling $2 trillion, some traceable to corrupt foreign oligarchs, were processed through U.S. banks. Virtually no regulatory or law-enforcement action was taken.

No financial regulations were passed? I couldn't read the site. But must be old. There are tons of new regulations now on the banks to detect the fraud. Now the responsibility is on the teller to "know your customer". It's very cumbersome now on businesses.

Yeah, millionaires and billionaires stand in line to do business with the tellers.

 

[Harry Bosch]

No financial regulations were passed? I couldn't read the site. But must be old. There are tons of new regulations now on the banks to detect the fraud. Now the responsibility is on the teller to "know your customer". It's very cumbersome now on businesses.

Yeah, millionaires and billionaires stand in line to do business with the tellers.

It happens every singe day. Here's how the fraud occurs: a coffee shop owner opens an account with a banker. They run a few thousand dollars through the branch every week. They almost always exclusively deal with the teller. Then all of a sudden, their daily deposits double, then triple, then triple again. The coffee store owner is running excess cash from some illegal activity through the bank. In my hometown, a small building owning LLC with three small tenants had such a relationship with his bank. He'd deposit around $6,000 week. Then it grew and grew. By the time operation was exposed, he was running around $15 million through the branch a year. And yea, he mostly dealt with the teller. This is why new federal regulations require a banker to "know your client". Bankers are suppose to understand their clients business, and notify and report when deposits grown unusually large for their level of business.

 

[southernhybrid]

I agree with the OP. And while it's only anecdotal, I have seen this for myself. I have a rather wealthy in law who cheats on his taxes every year. He's proud of it. He values himself by how much money he makes and how much tax fraud he can commit without getting caught. He's never been aduited. I've read several articles like the one in the OP that give statistics on what type of person is audited by the IRS. It's rarely people like my in law.

I have a dear friend who has been poor or lower middle class for most of her adult life. She works hard, often long hours, but her salary is low middle class. She has been audited several years ago when she was eligible to take the EIC. It's a known fact that the IRS audits a good percentage of people who receive public benefits and tax breaks for the lower socio-economic classes. Heaven forbid some poor high school grad should manage to get a tiny bit of money from the government that they may not be entitled to receive. Of course, if they were paid a decent wage by their employers, they wouldn't need those little government benefits. So, who is the real benefactor of these programs for the working poor? Looks like welfare for the employers to me.

Our government and capitalistic system has been corrupted by the upper few percent. I support capitalism, but what we have today is an autocratic, poorly regulated type of capitalism. Capitalism must be combined with regulations that keep the leaders from stealing the vast majority of the profits and keep them from treating the workers as something close to slaves, with low pay and poor working conditions.

The Republican Party have become the keepers of this system and they will do anything they can to keep the little people in their place while allowing the few percent at the top to get away with a life long criminal way of life, void of compassion, and with a hatred of justice. But, I digress.

You can't have a democracy when there is so much corruption at the top. We have too many ultra wealthy corrupt politicians who's primary concern is keeping this corrupt system in place. There is nothing wrong with working hard, being creative and becoming wealthy. But, how many billions does one need to hoard? And, shouldn't those at the top be expected to contribute more as their success is dependent on the system and the workers? We're not even talking about raising taxes. I'd be happy to see them pay their fair share instead of cheating the system that has supported their efforts. I've said enough......

 

[Loren Pechtel]

No financial regulations were passed? I couldn't read the site. But must be old. There are tons of new regulations now on the banks to detect the fraud. Now the responsibility is on the teller to "know your customer". It's very cumbersome now on businesses.

Yeah, millionaires and billionaires stand in line to do business with the tellers.

It happens every singe day. Here's how the fraud occurs: a coffee shop owner opens an account with a banker. They run a few thousand dollars through the branch every week. They almost always exclusively deal with the teller. Then all of a sudden, their daily deposits double, then triple, then triple again. The coffee store owner is running excess cash from some illegal activity through the bank. In my hometown, a small building owning LLC with three small tenants had such a relationship with his bank. He'd deposit around $6,000 week. Then it grew and grew. By the time operation was exposed, he was running around $15 million through the branch a year. And yea, he mostly dealt with the teller. This is why new federal regulations require a banker to "know your client". Bankers are suppose to understand their clients business, and notify and report when deposits grown unusually large for their level of business.

Which will catch the money laundering. It won't do anything about the big financial fraud like our former occupant of the White House.

 

[Loren Pechtel]

I have a dear friend who has been poor or lower middle class for most of her adult life. She works hard, often long hours, but her salary is low middle class. She has been audited several years ago when she was eligible to take the EIC. It's a known fact that the IRS audits a good percentage of people who receive public benefits and tax breaks for the lower socio-economic classes. Heaven forbid some poor high school grad should manage to get a tiny bit of money from the government that they may not be entitled to receive. Of course, if they were paid a decent wage by their employers, they wouldn't need those little government benefits. So, who is the real benefactor of these programs for the working poor? Looks like welfare for the employers to me.

It's not that the IRS wants to go after the little guys. It's that they have been so emasculated that about all they can do is comparing various pieces of data and squawking when they don't match. This mostly catches mistakes but it does catch some fraud. Little guy issues. The big guys aren't doing things the computers can catch, that requires skilled people looking into things.

 

[southernhybrid]

I have a dear friend who has been poor or lower middle class for most of her adult life. She works hard, often long hours, but her salary is low middle class. She has been audited several years ago when she was eligible to take the EIC. It's a known fact that the IRS audits a good percentage of people who receive public benefits and tax breaks for the lower socio-economic classes. Heaven forbid some poor high school grad should manage to get a tiny bit of money from the government that they may not be entitled to receive. Of course, if they were paid a decent wage by their employers, they wouldn't need those little government benefits. So, who is the real benefactor of these programs for the working poor? Looks like welfare for the employers to me.

It's not that the IRS wants to go after the little guys. It's that they have been so emasculated that about all they can do is comparing various pieces of data and squawking when they don't match. This mostly catches mistakes but it does catch some fraud. Little guy issues. The big guys aren't doing things the computers can catch, that requires skilled people looking into things.

I agree, which is why Biden wants to put a lot more assets into the IRS so those who are doing the most cheating can be audited.

 

[Tigers!]

So what did Obama achieve in 8 years?

 

[Harry Bosch]

So what did Obama achieve in 8 years?

I can think of a few! One thing, though that is incredibly important is that he peacefully oversaw the transition of power to a new president. Very important. He also oversaw the recovering economy from the 2008 crash; ended American's war in Iraq, protected DACA kids; increased access to health care for millions; killed the worst terrorist in US history; supported marriage equality for LGBT community; started the withdraw of US troops in Afghanistan; Dodd-Frank; reversed Bush era torture policies; repealed military's don't ask don't tell policy; negotiated treaty with Iran; and there are many others. But the biggest issue by far is the peaceful transition of power. Without the first feat, he would have been a failure. I'm sure you agree?

 

[DBT]

As legislators tend to be in the upper echelons of society, income, wealth and power...there may be a bias toward benefiting those in their own class when it comes to taxation, employees, rates of pay, conditions, etc.

 

[Tigers!]

So what did Obama achieve in 8 years?

I can think of a few! One thing, though that is incredibly important is that he peacefully oversaw the transition of power to a new president. Very important. He also oversaw the recovering economy from the 2008 crash; ended American's war in Iraq, protected DACA kids; increased access to health care for millions; killed the worst terrorist in US history; supported marriage equality for LGBT community; started the withdraw of US troops in Afghanistan; Dodd-Frank; reversed Bush era torture policies; repealed military's don't ask don't tell policy; negotiated treaty with Iran; and there are many others. But the biggest issue by far is the peaceful transition of power. Without the first feat, he would have been a failure. I'm sure you agree?

I was thinking more along the lines of the OP as to his achievements but thank you for enumerating that list. Good to be reminded.

 

[Harry Bosch]

So what did Obama achieve in 8 years?

I can think of a few! One thing, though that is incredibly important is that he peacefully oversaw the transition of power to a new president. Very important. He also oversaw the recovering economy from the 2008 crash; ended American's war in Iraq, protected DACA kids; increased access to health care for millions; killed the worst terrorist in US history; supported marriage equality for LGBT community; started the withdraw of US troops in Afghanistan; Dodd-Frank; reversed Bush era torture policies; repealed military's don't ask don't tell policy; negotiated treaty with Iran; and there are many others. But the biggest issue by far is the peaceful transition of power. Without the first feat, he would have been a failure. I'm sure you agree?

I was thinking more along the lines of the OP as to his achievements but thank you for enumerating that list. Good to be reminded.

Sorry, I was being snarky. Again, I'd say that Dodd-Frank (although it's made life difficult for banks); increasing the amount of auditors; and further bankruptcy protection (really started by Elizabeth Warren). But I agree that Joe should dramatically increase the amount of auditors and go after cheaters.

 

[Swammerdami]

But, how many billions does one need to hoard?

A very bad YouTube of a relevant exchange in a good movie.

 

[ZiprHead]

So what did Obama achieve in 8 years?

I can think of a few! One thing, though that is incredibly important is that he peacefully oversaw the transition of power to a new president. Very important. He also oversaw the recovering economy from the 2008 crash; ended American's war in Iraq, protected DACA kids; increased access to health care for millions; killed the worst terrorist in US history; supported marriage equality for LGBT community; started the withdraw of US troops in Afghanistan; Dodd-Frank; reversed Bush era torture policies; repealed military's don't ask don't tell policy; negotiated treaty with Iran; and there are many others. But the biggest issue by far is the peaceful transition of power. Without the first feat, he would have been a failure. I'm sure you agree?

I was thinking more along the lines of the OP as to his achievements but thank you for enumerating that list. Good to be reminded.

1 – Rescued the country from the Great Recession, cutting the unemployment rate from 10% to 4.7% over six years

2 – Signed the Affordable Care Act which provided health insurance to over 20 million uninsured Americans

3 – Ended the war in Iraq

4 – Ordered for the capture and killing of Osama Bin Laden

5 – Passed the $787 billion America Recovery and Reinvestment Act to spur economic growth during the Great Recession

6 – Supported the LGBT community's fight for marriage equality

7 – Commuted the sentences of nearly 1200 drug offenders to reverse “unjust and outdated prison sentences"

8 – Saved the U.S. auto industry

9 – Helped put the U.S. ontrack for energy independence by 2020

10 – Began the drawdown of troops in Afghanistan

11 – Signed the Deferred Action for Childhood Arrivals allowing as many as 5 million people living in the U.S. illegally to avoid deportation and receive work permits

12 –Signed the Dodd-Frank Wall Street Reform and Consumer Protection Act to re-regulate the financial sector

13 – Dropped the veteran homeless rate by 50 percent

14 – Reversed Bush-era torture policies

15 – Began the process of normalizing relations with Cuba

16 – Increased Department of Veteran Affairs funding

17 – Signed the Credit Card Accountability, Responsibility, and Disclosure Act

18 – Boosted fuel efficiency standards for cars

19 – Improved school nutrition with the Healthy Hunger-Free Kids Act

20 – Repealed the military's “Don't Ask, Don't Tell" policy

21 – Signed the Hate Crimes Prevention Act, making it a federal crime to assault anyone based on sexual or gender identification

22 – Helped negotiate the landmark Iran Nuclear Deal

23 – He signed the Lilly Ledbetter Fair Pay Act to combat pay discrimination against women

24 – Nominated Sonia Sotomayor to the Supreme Court, making her the first Hispanic ever to serve as a justice

25 – Supported veterans through a $78 billion tuition assistance GI bill

26 – Won the Nobel Peace Prize in 2009 “for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples"

27 – Launched My Brother's Keeper, a White House initiative designed to help young minorities achieve their full potential

28 – Expanded embryonic stem cell research leading to groundbreaking work in areas including spinal injury treatment and cancer

https://www.good.is/articles/obamas-achievements-in-office

 

[jab]

So what did Obama achieve in 8 years?

I can think of a few! One thing, though that is incredibly important is that he peacefully oversaw the transition of power to a new president. Very important. He also oversaw the recovering economy from the 2008 crash; ended American's war in Iraq, protected DACA kids; increased access to health care for millions; killed the worst terrorist in US history; supported marriage equality for LGBT community; started the withdraw of US troops in Afghanistan; Dodd-Frank; reversed Bush era torture policies; repealed military's don't ask don't tell policy; negotiated treaty with Iran; and there are many others. But the biggest issue by far is the peaceful transition of power. Without the first feat, he would have been a failure. I'm sure you agree?

an attractive bunch o, red herrings--but Obama was NOT strong on white collar crime.

 

[Harry Bosch]

So what did Obama achieve in 8 years?

I can think of a few! One thing, though that is incredibly important is that he peacefully oversaw the transition of power to a new president. Very important. He also oversaw the recovering economy from the 2008 crash; ended American's war in Iraq, protected DACA kids; increased access to health care for millions; killed the worst terrorist in US history; supported marriage equality for LGBT community; started the withdraw of US troops in Afghanistan; Dodd-Frank; reversed Bush era torture policies; repealed military's don't ask don't tell policy; negotiated treaty with Iran; and there are many others. But the biggest issue by far is the peaceful transition of power. Without the first feat, he would have been a failure. I'm sure you agree?

an attractive bunch o, red herrings--but Obama was NOT strong on white collar crime.

Okay. I figured that he had other higher priorities. He did better than than Trump. Going after white collar crime is very difficult and expensive. They often have great attorneys. You must have patience, time, and a lot of resources. And we Americans are not very patient. Especially with Presidents.

 

[funinspace]

So what did Obama achieve in 8 years?

I can think of a few! One thing, though that is incredibly important is that he peacefully oversaw the transition of power to a new president. Very important. He also oversaw the recovering economy from the 2008 crash; ended American's war in Iraq, protected DACA kids; increased access to health care for millions; killed the worst terrorist in US history; supported marriage equality for LGBT community; started the withdraw of US troops in Afghanistan; Dodd-Frank; reversed Bush era torture policies; repealed military's don't ask don't tell policy; negotiated treaty with Iran; and there are many others. But the biggest issue by far is the peaceful transition of power. Without the first feat, he would have been a failure. I'm sure you agree?

an attractive bunch o, red herrings--but Obama was NOT strong on white collar crime.

Absolutely!

William Black was one of the key people involved in the prosecution in the aftermath of the S&L crisis, and has been very critical of the lack of real criminal prosecution from the fallout of this latest financial crisis (2008-9).

His blog line and ref: https://www.financialsense.com/blogs/1374/bill-blacks-blog

An intro into his opinions:
https://www.financialsense.com/cont...ed-by-a-troublesome-little-thing-called-facts

The Obama administration’s record of prosecuting elite financial frauds is worse than the Bush administration’s record, which is a very large statement. Syracuse University’s TRAC issued a report on November 11, 2011 entitled “Criminal Prosecutions for Financial Institution Fraud Continue to Fall.”

Neither administration has prosecuted any elite CEO for the epidemic of mortgage fraud that drove the ongoing crisis. This contrasts with over 1,000 elite felony convictions arising from the S&L debacle. The ongoing crisis caused losses more than 70 times greater than the S&L debacle and the amount of elite fraud driving this crisis is also vastly greater than during the S&L debacle. Bank CEOs leading “accounting control frauds” now do so with impunity from the criminal laws. They become wealthy through fraud and even if they are sued civilly they almost invariably walk away wealthy with the proceeds of their frauds.