Why Rubashkin?

"A federal judge in Iowa on Monday announced a prison sentence of 27 years on financial fraud charges for Sholom Rubashkin, the former manager of a kosher meatpacking plant where hundreds of illegal immigrant workers were arrested in a 2008 raid that garned national attention. Although the case against Mr. Rubashkin originally centered on immigration charges, during the trial in Cedar rapids prosecutors focused instead on financial abuses when he was in charge of the Agriprocessors slaughterhouse in Postville, Iowa. The sentence, two years more than prosecutors had requested, was unusually high in the recent history of financial crimes--longer than the term for Jeffrey K. Skilling, the former chief executive of Enron, and L. Dennis Kozlowski, the former chief executive of Tyco. ... The sentence is also likely to deepen the belief among some Orthodox Jewish leaders, who have sustained an international campaign on Mr. Rubashkin's behalf, that he was unfairly tried. ... The federal prosecutors had originally sought a life sentence for Mr. Rubashkin, but then revised their request to 25 years. Six former attorneys general, including Janet K. Reno and Edwin Meese III, wrote to Judge Reade in April arguing that a life sentence would be a severe misreading of the sentencing guidelines as applied to white-collar crimes", Julia Preston at the NYT, 22 June 2010, link:

http://www.nytimes.com/2010/06/22/us/22iowa.html.

Amazing, I agree with Janet Reno. Applying the sentencing guideline 2B1.1 to Rubashkin's crimes, I add four points as a manager of five or more, and 22 points for $26 million damage, total = 33 points, a 135-168 month sentence from the table. What's going on here? Is the Obama administration's (ad hominem attack notice) displaying its anti-semitism for all to see? A life sentence? Why?

Continuing Wall Street Control of DOJ

"The Justice Department on Thursday announced the arrests of nearly 500 people in what it billed as a nationwide 'takedown' of mortgage scams, many of them directed at homeowners in financial distress. ... Federal officials said they have identified losses of $2.3 billion stemming from hundreds of mortgage-fraud cases. High-profile convictions of Wall Street investment bankers have eluded authorities. On Thursday, Attorney General Eric Holder tried to showcase smaller cases. 'If you want to gauge the efficacy of this task force, you can't focus on simply what has happened with regards to the large institutions on Wall Street,' he said', my emphasis, Thomas Catan at the WSJ, 18 June 2010, link:

http://online.wsj.com/article/SB10001424052748704289504575312691317663972.html.

"It involves 1,215 criminal defendants in cases that uncovered more than $2.3 billion in losses. ... Hundreds of FBI agenst are working on the task forces with other law enforcement agencies to combat a type of crime that poses 'a risk to our economic stability' as a nation, FBI Director Rovert Mueller said at the news conference", Pete Yost at the Houston Chronicle, 18 June 2010, link:

http://www.chron.com/disp/story.mpl/business/7059319.html.

"Since taking office at the height of the financial crisis, President Barack Obama has promised to hold Wall Street accountabel for the meltdown. Attorney General Eric Holder reinforced that message in November when he vowed to prosecute Wall Street executives and others responsible for the crisis. ... His [DOJ] took steps to fulfill that promise this week when it arrested the ex-chairman of one of the nation's biggest mortgage firms--the largest crisis-related criminal case--and announced 1,215 people have been charged with mortgage fraud since March 1. But that success masks difficulties in the highest-profile probes: those of Wall Street banks. ... And law enforcement sources say no such charges are imminent. ... Justice officials say Holder did not over-promise and that the task force is targeting all financial fraud, not just on Wall Street. ... The shortage of Wall Street prosecutuions is not for lack of effort. ... But investigators are encountering obstacles in what they call their top-priority cases, which souces saud include probes of JP Morgan Chase, Citigroup, Deutsche Bank, UBS, Goldman Sachs, Morgan Stanley and the former Lehman Brothers", Jerry Markon at the Houston Chronicle, 18 June 2010, link: http://www.chron.com/disp/story.mpl/business/7059317.html.

More DOJ guerilla theater. Why not Eric? When I see Lloyd Antoinette Blankfein sentenced to 30 years for securities fraud, I might consider the DOJ is fighting securities fraud. Maybe. Let's apply my "Blankfein Test" and see if I would have bothered with the 1,215 arrests in question. $2.3 billion / 1,215 = $1.9 million a person. I would have selected some of them and ignored the rest. As they total $2.3 billion, I consider pursuing them in the aggregate, a waste of DOJ resources.

Quoted without comment.

Will Alan Greenspan and the other Fed Heads get indicted? What going on? The DOJ pursues these peanuts to turn firms like Vampire Squid into victims! Did any of these 1,215 peanuts get TARP money? Nonsense. I think the DOJ is running around in circles trying to figure out which peanuts working for these "top-priority" firms are safe targets.

The SEC and DOJ Fold

"The Justice Department's decision last week to abandon a criminal probe against current and former exectuives at [AIG] underscores the difficulty facing prosecutors who want to hold individuals criminally accountable for the financial crisis. ... But, late last Friday, Mr. Cassano and two colleagues who were also investigated were told through their lawyers that they wouldn't face criminal charges after prosecutors found evidence supporting Mr. Cassano's account, people familar with the matters said. ... The conclusion of the two-year criminal investigation marks a setback for prosecutors who have come under public and political pressure to find evidence of criminal conduct in the wake of the recession. ... The travails aren't over for Mr. Cassano. The [SEC], which has to meet a lower standard of proof, is considering whether to file civil charges, according to people familiar with the matter. Mr. Cassano's lawyers declined to comment on the civil probe. ... For months, they believed Mr. Cassano hadn't disclosed to senior AIG executives or its auditors, PricewaterhouseCoopers LLC, that an accounting adjustment allowed his unit to avoid writing down the value of its swaps by billions of dollars, these people said. PwC declined to comment", Amri Efrati at the WSJ, 24 May 2010: http://online.wsj.com/article/SB10001424052748704904604575262942729708122.html.

"The [SEC] dropped its investigation of a former [AIG] executive who ran a subsidiary at the center of AIG's problems, following a similar move last month by prosecutors. ... Federal investigtors looked into whether [Joseph] Cassano misled investors with reassuring statements about AIG's exposure to mortgage losses, people familiar with the matter have said. A turning point came when prosecutors found evidence Mr. Cassano did make key disclosures. ... Mr. Cassano's lawyers called the SEC's move 'completely appropropriate in light of the facts.' They said the SEC staff 'realized that our client acted in good faith, kept his superiors informed, and was honest with investors", Kara Scannell at the WSJ, 17 June 2010, link: http://online.wsj.com/article/SB10001424052748703513604575311350142446886.html.

Well SEC? Will you now go after PWC for its wonderful AIG audit? Well PCAOB?

I expected this after the DOJ folded.

Where's the Crime?

"US authorities arrested Lee Farkas, the high-rolling former chairman of a failed Florida mortgage lender, and charged him with orchestrating a seven-year, multibillion-dollar fraud that contributed to the collapse of a major bank and targeted the US government. ... On Wednesday, the US alleged in a criminal indictment that Mr. Farkas had been propping up his firm since 2002 using an array of fraudulent schemes that have cost investors and government programs in excess of $2 billion. ... The Federal Housing Administration said Wednesday it had lost $3 billion because Taylor Bean had lied about the health of loans it was servicing for the public housing agency. ... 'The fraud alleged here was truly stunning in its scale and complexity,' said Assistant Attorney General Lanny Breuer, who heads the [DOJ's] criminal division. ... The indictment is the largest case in which a bank has been accused of attempting to defraud the bank-bailout fund. It also comes as the Obama administration comes under pressure to hold bankers accountable for their perceived role in helping cause the financial crisis. According to the government's indictment, which was unsealed Wednesday, Mr. Farkas and his co-conspirators started the fraud by siphoning money from Colonial, which lent it billions of dollars to buy mortgages, and from its own funding arm, Ocala Financing", my emphasis, Thomas Catan & Evan Perez at the WSJ, 17 June 2010, link:

http://online.wsj.com/article/SB10001424052748704198004575310703342951666.html.

It seems Taylor Bean was run like a major Wall Street house, i.e., to benefit its officers. As much as possible was apparently stripped from it then it failed. So? Is Farkas' problem failing to install a "former" officer as Treasury Secretary? Didn't Fannie Mae have multiple accounting restatements involving billions of dollars? Won't Freddie and Fannie need about $400 billion in bailouts? Didn't AIG get $182 billion? Why is the DOJ bothering with Farkas? What's wrong with propping up a failing enterprise anyway? "Stunning in its scale"? Huh? Anyone remember Lehman and Repo 105?

Forbes Exposes DOJ Extortion Racket

"In 2007 Weatherford International, an oil service firm with roots in Houston, discovered it might have a bribery problem on its hands--one or more of its employees might have paid bribes in Europe. ... By that time [William] Jacobson had left Justice to join Fulbright [& Jaworski] as a partner and started doing compliance work for none other than Weatherford. ... Nice work if you can get it--and to the tune of billions of dollars, lawyers, accountants and consultants, many with past ties to the Justice Department, are getting it. ... Whether it's having any impact on reducing bribery is another matter. Instead, companies can find themselves getting extorted in foreign lands, only to get extorted again by Washington. ... More likely, the company pays out huge fines and then hires more lawyers as government-mandated compliance monitors, a job that can stretch into years of legal billings. ... Mark Mendelsohn, 42, headed the [DOJ's] FCPA unit when the surge in enforcement largely occurred. ... 'At some point a new person will sit in my seat,' said Mendelsohn while on stage with a group of FCPA defense lawyers at a conference in February. 'I will join Peter and Richard and Mary on the other end of the dais.' ... For decades the FCPA, which prohibits bribery of foreign officials, was a sleepy statute, hardly enforced. ... In 2000 federal prosecutors brought no FCPA actions. In 2004 there were 3. Last year ther ewere 34 criminal FCPA actions. A lot more are in the pipeline. The [DOJ] has 150 open FCPA investigations. ... The prosecutors, though, are doing something else at the same time. They are creating a lucrative industry--FCPA defense work--in which they will someday be prime candidates for the cushy assignments. ... But there is nothing to stop prosecutors from ginning up cases that will feed the lawyers who used to have their jobs or from looking forward to a payday in the private sector that will be made possible by their busy successors at Justice. ... The grandaddy of cases is the one involving Siemens, Europe's biggest engineering firm. ... Debevoise and Deloitte charged $850 million in fees and expenses. ... Lawyers and accountants also made a fortune off a recently resolved Daimler bribery case. ... Deloitte, which has an FCPA practice headed by Edward Rial, a former federal prosecutor, got its time at the feeding trough. Delotte declines to comment. [Robert] Bennett says his work was in the bet interest of the company facing serious prosecution", my emphasis, Nathan Vardi at Forbes, 24 May 2010, link: http://www.forbes.com/forbes/2010/0524/business-weatherford-kbr-corruption-bribery-racket.html.

I supppose MM was creating a job for himself for the time he was to leave the DOJ. The FCPA was rarely enforced until MM decided he needed a post-DOJ position. AUSAs "ginning up cases"? "Say it ain't so, Joe". Gag me with a spoon. Until you've seen the DOJ at work, you can't believe how incompetent and corrupt the typical AU attorney and AUSA is. You can't believe it. Why did my "girlfriend" Mary Jo White threaten to indict Joe Jett? If couldn't be because GE's Jack Welch wanted it, could it? GE didn't pay off by hiring Debevoise & Plimption to represent it in various matters? How dare you think such a thing. See my 31 December 2008 and 1 May 2010 posts:

http://skepticaltexascpa.blogspot.com/2008/12/justice-department-extortion-racket-4.html.
http://skepticaltexascpa.blogspot.com/2010/05/justice-department-extortion-racket-6.html.

IRS Doublecross?

"An influential group of criminal tax lawyers is sharply criticizing the [IRS] for its decision to prosecute some people who came forward to confess that they had used foreign bank accounts to evade taxes, saying it goes against a longstanding practice of encouraging taxpayers to come forward to report tax violations. ... A letter dated March 30 and signed by 32 lawyers, many former high-ranking tax officials, said the IRS actions 'smack of trickery.' ... The letter acknowledged the government's right to reject confessors if it already had their names or opened an audit. But it argued that subjecting these taxpayers to rare public prosecutions would look like a doublecross", Laura Saunders & Arden Dale at the WSJ, 5 May 2010: http://online.wsj.com/article/SB10001424052748704866204575224651536102026.html.

It looks that way to me. The DOJ did not have to go along with the IRS. The IRS cannot effect a criminal prosecution.

Go Blago!-2

"With his trial on corruption charges weeks away, former Illinois Gov. Rod Blagojevich [Blago] sought an unusual witness for the defense: President Barack Obama. ... Spokesmen for the White House and federal prosecutors declined to comment. ... At a news conference this week, he called US Attorney Patrick Fitzgerald a coward. Mr. Fitzgerald brought the corruption charges against [Blago]. ... Mr. Obama has said no representative of his had anything to do with the alleged deals for the Senate seat, according to the motion. [Blago] argues that those statements 'contradict the testimony of an important government witness'," Douglas Belkin & Joe Barrett at the WSJ, 23 April 2010, link:

http://online.wsj.com/article/SB10001424052748703876404575200322230424714.html.

"[Blago] finally made good on a promise. He put President Barack Obama right in the middle of [Blago's] own political corruption case. And now it's finally clear why, from the moment of [Blago's] arrest in December 2008, White House spinners loudly portrayed our former Gov. Dead meat as some drooling, raving lunatic. ... But raving lunatics care little for their own survival. And in an amazing defense motion filed Thursday, [Blago] proved once again that he is quite sane. ... Obama's former patron and real estate fairy, the convicted influence peddler Tony Rezko, is a key player in the government's case. [Blago's] aim is to undercut what Rezko has told investigators. ... It is no secret that some in journalism get offended when anyone dares mention that the president was involved in Chicago politics. But the filing is not only a legal document, it's a political message from [Blago] to Obama. So allow me to translate the Chicago Way. 'Dear Barack, my old friend. I want you to use all your powers, all your skills, to make me an offer I can't refuse. I'm Mr. Celebrity-get-me-out-of-here, and you better get me out of here. Thanks, Rod.' ... US District Judge James Zagel surely isn't happy", John Kass at the Chicago Tribune, 23 April 2010, link: http://www.chicagotribune.com/news/columnists/ct-met-kass-friday-20100423,0,983180.column.

Obama can voluntarily appear and potentially look bad. Or he can resist appearing and look worse. Apparently, Obama chose the latter course.

Who does Obama think he's fooling with? Terry Hodge, my 5 March 2010 post; http://skepticaltexascpa.blogspot.com/2010/03/two-state-legislator-criminals.html. My translation of Blago's action adds, "Or else you can follow Richard Nixon. I know where the bodies are buried."

Good Question Pat

"With the support of 70 percent of its citizens, Arizona has ordered sheriffs and police to secure the border and remove illegal aliens, half a million of whom now reside there. ... 'We in Arizona have been more than patient waiting for Washington to act,' said Gov. Jan Brewer. 'But decades of inaction and misguided policy have created an unacceptable situation.' ... Barack Obama ... is siding with the law-breakers. He is pandering to the ethnic lobbies. He is not berating a Mexican regime that aids and abets the invasion of the country of which he is commander in chief. Instead, he attacks the government of Arizona for trying to fill a gaping hole in law enforcement left by his own deriliction of duty. ... He has called on the Justice Department to ensure that Arizona's sheriffs and police do not violate anyone's civil rights. But he has said nothing about the rights of the people of Arizona who must deal with the costs of having hundreds of thousands of lawbreakers in their midst. ... The state has a fiscal crisis caused in part by the burden of providing schooling and social welfare for illegals and their families, who consume far more in services than they pay in taxes and who continue to pour in. Even John McCain is now calling for 3,000 troops on the border. ... If Arizona does not get control of the border and stop the invasion, US citizens will stop coming to Arizona and will begin to depart, as they are already fleeing California. ... Whose country is this, anyway?," Pat Buchanan at Vdare, 26 April 2010, link:

http://www.vdare.com/buchanan/100426_whose_country.htm.

Well said Pat. As far as Obama is concerned, non-Minority Americans are just cows to be milked for money to be given to "his" people.

Justice Department Extortion Racket-6

"The top government prosecutor overseeing international corporate bribery investigations is expected to join New York-based Paul, Weiss, Rifkind, Wharton & Garrison LLP next month, following months of courtship by about half a dozen law firms. ... Government prosecutors frequently join private law firms when they leave the civil service. But there was a feeding frenzy surrounding the 42-year-old Mr. [Mark] Mendelsohn after rumors of his departure for private practice started to circulate last year. ... FCPA prosecutions and fines have increased sharply in recent years amid a broader global crackdown on corruption. ... Mr. Mendelsohn is a particular catch for Paul Weiss because the FCPA is particularly vague. ... As the government steps up regulation of many industries, law firms are particularly eager to hire top government lawyers, legal recruiters say. Jane Roberts, a legal recruiter in Washington, said top government attorneys can command $1 million to $2.5 million a year in compensation at private firms", Nathan Koppel at the WSJ, 14 April, 2010, link:

http://online.wsj.com/article/SB10001424052702303695604575182174285804354.html.

The FCPA is so vague it gives AUSAs many reasons not to prosecute. Reasons they collect after they leave the DOJ.

Sic Semper Whistleblower-3

"With the benefit of hindsight sharpened by the view from the Pennsylvania prison where he began serving three-plus years in January, Mr. [Bradley] Birkenfeld says he is an informant who blew on the wrong whistle. ... The former UBS AG banker was the central informant in an investigation that led to a wide-ranging IRS crackdown on secret offshore bank accounts. That he also is the only person so far to be sentenced to substantial prison time--40 months, for conspiring to defraud the US government--has made Mr. Birkenfeld a popular hero in some corners of the tax community, though others disagree. ... At his sentencing hearing in August, Justice Department [sic] prosecutor Kevin Downing said: 'I will say that without Mr. Birkenfeld walking into the door of the Department of Justice [sic] in the summer of 2007, I doubt as of today that thus massive fraud scheme would have been discovered by the US government.' ... Mr. Birkenfeld says he came to the Justice Department [sic] ready to tell everything, and asked the agency to subpoena him so that he wouldn't break the law by naming names", Arden Dale at the WSJ, 9 April 2010, link:

http://online.wsj.com/article/SB10001424052702303720604575170362357298800.html.

What can you say? Who at the misnamed Justice Department didn't want this case prosecuted? Why? When the IRS wants information, it issues a subpoena. What's going on here?

Lehman's Enablers

"A bankruptcy examiner's report about the accounting practices at Lehman Brothers Holdings Inc [LBHI] is filled with legally charged language, calling the bank's financial statements 'materially misleading' and saying its executives engaged in 'actionable balance sheet manipulation.' ... But legal experts say hurdles remain to criminal prosecutions that, while potentially surmountable, also could be significant. ... The examiner wrote there was 'sufficient evidence' to support a legal claim that Mr. [Richard] Fuld was 'at least grossly negligent for failing to ensure' Lehman filed proper financial statements about its accounting for the transaction, and that a key former executive of the firm, the chief operating officer, personally briefed him on the matter. ... But legal experts say the report can and likely will be used as a roadmap for the Justice Department and other agenceis considering charges or lawsuits. Representatives for the [SEC] and US attorney's offices in Manhattan and Brooklyn declined to comment. ... Another hurdle: Lehman had the blessing of its outside auditor, [E&Y], which had reviewed its quarterly earnings reports in 2008 and was briefed on concerns about Repo 105 accounting, the report said. ... [E&Y] has said the accounting for the repo transactions complied with generally accepted accounting principles", Amir Efrati & Ashby Jones at the WSJ, 13 March 2010, link:

http://online.wsj.com/article/SB10001424052748703447104575117910207173620.html.

Blessing? Big 87654 firm? So? Didn't they bless backdated stock options? Didn't E&Y sanction the ".001" standard? Who cares what E&Y thinks? E&Y should be indicted for securities fraud along with anyone at LBHI who sanctioned the Repo 105 accounting. Disagreeing with the "legal experts", I think drafting indictments and securing convictions should be easy here. Just "flip" the supposed "advice of counsel" defense to "you secured professional advice to make it appear you wanted it as opposed to creating an after the fact rationalization". Then let the jury decide.

Tyler Durden had an interesting 14 March 2010 post on E&Y's Lehman adventure at Phil's Stock World, link:

http://www.philstockworld.com/2010/03/14/deconstructingfuncting-ernst-amp-young/

Lehman's Fiddles

"A scathing report by a US bankruptcy-court examiner investigating the collapse of Lehman Brothers Holdings Inc. [LBHI] blames senior executives and auditor Ernst & Young [E&Y] for serious lapses that led to the largest bankruptcy in US history and the worst financial crisis since the Great Depression. ... The document runs thousands of pages and contains fresh allegations. In particular, it alleges that Lehman executives manipulated its balance sheet, withheld information from the board, and inflated the value of toxic real estate assets. ... The examiner said in the report that throughout the investigation it conducted regular weekly calls with the SEC and Department of Justice. There have been no prosecutions of Lehman executives to date. ... Mr. [Anton] Valukus, chairman of law firm Jenner & Block, devoted more than 300 pages alone to balance-sheet manipulation, accusing Lehman of using accounting methods to move assets off its books. But because the moved assets represented 105% or more of the cash it received in returns, accounting rules allowed the transactions to be treated as 'sales' rather than financings. The result: Assets shifted away from Lehman's balance sheet, reducing the amount of debt it showed to investors. ... Lehman's own global financial controller, Martin Kelly, told the examiner that 'the only purpose or motive for the transactions was reduction in balance sheet' and 'there was no substance to the transactions.' Mr. Kelly said he warned former Lehamn finance chiefs Erin Callan and Ian Lowitt about the maneuver, saying the transactions posed 'reputational risk' to Lehman if their use became publicly known. ... Mr. Valukus' report is among the largest undertakings of its kind. Those singled out in the report won't face immediate repercussions. Rather, the report provides a type of roadmap for Lehman's bankruptcy estate, creditors and other authorities to pursue possible actions against former Lehman executives, the bank's auditors and others involved in the financial titan's collapse. ... One party singled out in the report is Lehman's audit firm, [E&Y], which allegedly didn't raise concerns with Lehman's board about the frequent use of the repo transactions. ... '[E&Y] took no steps to question or challenge the non-disclosure by Lehman of its use of $50 billion of temporary off-balance sheet transactions,' Mr. Valukus wrote", Mike Spector, Susanne Craig & Peter Lattman at the WSJ, 12 March 2010, link:

http://online.wsj.com/article/SB10001424052748703625304575115963009594440.html.

"Many executives inside [LBHI] quietly fretted about the firm's accounting as the company headed to the brink in September 2008. Matthew Lee did something about it. In May 2008, the former Lehman senior vice president wrote a letter to senior management warning that the company may have been masking the true risks on its balance sheet. ... His warnings, disclosed for the first time in a report by a US bankruptcy-court examiner, could trigger legal consequences for Lehman's auditor [E&Y], as well as former senior officials. ... 'We are dealing with a whistle-blower letter, that is on its face pretty ugly and will take us a significant amount of time to get through,' William Schlich, a former lead partner on [E&Y's] Lehman team, wrote in a June 5, 2008, email to a colleague, which is included in the examiner's report. ... In a June 12, 2008 interview with [E&Y], Mr. Lee raised the issue that Lehman was moving as much as $50 billion off its balance sheet, using a practice the firm called 'Repo 105,' the report says", Michael Corkery at the WSJ, 13 March 2010, link: http://online.wsj.com/article/SB10001424052748703447104575118122594094284.html.

We know E&Y. Substance over form? From the Big 87654? You're joking! E&Y accepts the ".001 standard", my 5 March 2008 post: http://skepticaltexascpa.blogspot.com/2008/03/enron-accounting-redux.html. Did Uncle Sam know about LBHI's accounting chicanery? Probably. See my 6 February 2008 post: http://skepticaltexascpa.blogspot.com/2008/02/treasury-and-banks.html. Yves Smith has a related 11 March 2010 post at her Naked Capitalism: http://www.nakedcapitalism.com/2010/03/ny-fed-under-geithner-implicated-in-lehman-accounting-fraud.html.

Two State Legislator Criminals

"The former assemblyman Anthony S. Seminerio, who prosecutors said took more than $1 million in payments from people and organizations doing business with the state, was sentenced to six years in prison before a federal judge in Manhattan on Thursday. ... Federal prosecutors said that from 1999 to 2008, he lobbied legislative colleagues and government officials on behalf of clients of a company he created called Marc Consultants. 'When you were elected, you were given a great privilege,' the judge, Naomi Reice Buchwald, said as Mr. Seminerio stared down at his clasped hands. 'You abused the trust placed in you.' ... Mr. Seminerio, 74, is among more than a dozen state lawmakers who have been forced to resign in recent years over ethical issues or have been convicted of crimes. ... A hearing in October to establish sentencing parameters included recordings of wiretapped conversations in which Mr. Seminerio talked with hospital executives, government officials and an undercover FBI agent, who paid $25,000 to Mr. Seminerio while posing as a developer looking for his help in securing tax credits and inserting language into legislation", Colin Moynihan at the NYT, 5 February 2010, link:

http://www.nytimes.com/2010/02/05/nyregion/05seminerio.html.

"State Rep. Terri Hodge provided a dramatic twist to the FBI's public corruption investigation Wednesday by agreeing to resign from the Texas House after pleading guility to failing to pay taxes on $74,000 in income, including more than $32,000 in bribes. Hodge, D-Dallas, also admitted that she never paid taxes on another $41,000, some of which was money she pilfered from her own campaign war chest for personal expenses. Neither prosecutors nor Hodge offered details. ... Hodge pleaded guilty to accepting money from prominent developers Brian and Cheryl Potashnik in the form of rent and utility payments. The Potashniks, both of whom have since pleaded guility to bribery, let her live in one of their affordable housing complexes for reduced rent and also bought her about $2,000 worth of carpet. ... 'People have to keep in mind that the role of the prosecutor is not to seek victory, but to seek justice,' said [John] Ratcliffe, now in private practice. The upside for the government is 'she's out of a position of public influence and trust, and she'll be held accountable for the rest of her life.' ... In pretrial filings, prosecutors alleged that Hodge 'received payments from families of Texas prison inmates oin return for her political support and assitance on proceedings affecting the inmate before the Texas Board of Pardons and Parole [BPP]'," Jason Trahan at the Dallas Morning News, 5 February 2010.

What's Seminerio's crime? Not working for the NY Fed where he can pass out multi-billion favors to his cronies Why does the FBI and DOJ waste time with this small-time corruption? Because this is all they are permitted to look at.

What happened here? Hodge ran afoul of the "prison-industrial complex" and its prison building campaign. The BPP is a corrupt joke. Who is Ratcliffe? The Dallas area former US Attorney. He's now a partner in John Ashcroft's (JA) law firm. Small world. We know JA, see my 17 January 2008 post: http://skepticaltexascpa.blogspot.com/2008/01/justice-department-extortion-racket.html. Compare Hodge's treatment to Olenicoff's, my 20 May 2008 post: http://skepticaltexascpa.blogspot.com/2008/05/sentencing-snipes-2.html. It's not for nothing I call it the (in)Justice Department.

Go Blago!

"Disgraced former Illinois Gov. Rod Blagojevich said Wednesday he would testify at his trial this summer and moved to introduce all the secretly recorded [FBI] tapes that are the basis of the corruption case against him. ... 'Today I am laying down the gauntlet,' Mr. Blagojevich said in the courthouse lobby. ... Mr. Blagojevich sad he and his lawyers have listened to al the tapes. Along with waiving his right to try to suppress their introduction in court, the ex-governor filed an affidavit asking the government to join him in airing as many tapes as possible, attorney Sam Adam Jr. said", Douglas Belkin at the WSJ, 11 February 2010, link:

http://online.wsj.com/article/SB10001424052748704140104575057360189067030.html.

Do I see a DOJ practice here, of not introducing all the evidence? Look at the Aleynikov case. Who else is on the Blago tapes? Eric Holder? His Obamaness?

Goldman's Schtarkes-5

"A former Goldman Sachs [GS] computer programmer was indicted on charges he stole computer codes used for proprietary high-frequency trading programs. ... Prosecutors from the [SDNY] US Attorney's office alleged that [Sergey] Aleynikov, on his last day at [GS] transferred substantial portions of [GS's] proprietary computer code for its high-frequency trading platform to an outside computer server in Germany. ... The firm maintained strict confidentiality agreements that required Goldman employees to sign away the rights to 'any invention, discoveries, concepts, ideas or information' developed while on the firm's payroll, according to the indictment", Chad Bray and Jacob Bunge at the WSJ, 12 February 2010, link: http://online.wsj.com/article/SB10001424052748703382904575059660427173510.html.

"A former [GS] computer programmer pleaded not guilty to charges that he stole computer codes used in the firm's high-frequency trading program. ... The case is set for trial beginning Nov. 29. ... At the plea hearing Assistant US Attorney Joseph Facciponti said a preliminary search didn't find any of Goldman's code on Teza's computers", Chad Bray at the WSJ, 18 February 2010 link: http://online.wsj.com/article/SB10001424052748703444804575071453563822806.html.

Why is the SDNY US Attorney's office enforcing a Vampire Squid (VS) contract? Why ask, it's the VS after all. Why is the "non-compete" important to the SDNY US Attorney's office? What element of which count in the indictment does it fulfill?

Go Aleynikov!

Junior at Jr. Deputy Accountant has a related 12 February 2010 post: http://www.jrdeputyaccountant.com/2010/02/goldman-rats-go-after-hft-program-thief.html.

Sentencing Stupidity

"Judges are looking skeptically at prosecutors' requests to give 15- to 25-year sentences for viewing sexual images of minors, handing down more sentences of five to 10 years, or in some cases probation. The movement has been gaining steam over the past two years even as the Justice Department has made child pornography and other child-exploitation prosecutions a top priority, leading to more than 2,300 cases last year, the highest figure since the department began tracking the statistic. ... The shift has upset advocates of abused children who say the sentences won't deter future misconduct. ... Ernie Allen, president of the National Center for Misisng & Exploited Children ... says the dissemination of such images encourages behavior that hurts children, not least the production of those images. Some child-porn viewers still get sentences of 15 or 20 years from judges who follow the guidelines. That's greater than punishments meted out to some child molesters and other violent criminals", my emphasis, Amir Efrati at the WSJ, 20 January 2010, link:

http://online.wsj.com/article/SB10001424052748704363504575003271494106644.html.

Absurd! 15+-year sentences for viewing child pornography? Hasn't the DOJ anything important to do? AUSAs love these cases. Why? They almost invariably result from sting operations, true no-brainers. I would repeal the laws against child pornography. Viewing an existing film is not making it, disagreeing with the DOJ. Making the film would almost invariably be criminal. California penal code (PC) section 266j provides 15-years to life for sexual battery on a child. California PC section 311.11 gives up to one year for child porn possession. Federal law is absurb! Allen, get lost. Grow up. No judge should sentence anyone to prison for viewing child porn. The more time the DOJ spends on these cases, the less time it has to prosecute the Vampire Squid. Even if reading about murders "encourages" committing them, doesn't the First Amendment say read?

Who do I blame for this? Those who brought us: prohibition and the drug laws, i.e., groups like the Women's Christian Temperance Union. After all, the Master said, ""You have heard that it was said to the people long ago, 'Do not murder, and anyone who murders will be subject to judgment.' But I tell you that anyone who is angry with his brother will be subject to judgment", Matt 5:21-22 (NIV). He also said, "You have heard that it was said, 'Do not commit adultery,' But I tell you that anyone who looks at a woman lustfully has already committed adultery with her in his heart'." Matt 5:27-28 (NIV). Here's the Christian-Jewish rub. Judaism focuses on acts; Christianity on thoughts. Jesus may have meant: since the thought preceeds the act, guard your thoughts. If so, much Christian doctrine collapses.

Another SEC Nothingburger-2

"A reinsurance firm owned by Warren Buffet's Berkshire Hathaway Inc. reached a $92 million settlement with the federal government that will allow the firm to avoid prosecution for its role in a fraud scheme involving [AIG]. As part of the deal, Berkshire agreed to several coporate-governance concessions. ... It will also pay $12.2 million to settle charges by the [SEC] in connection with the fraud and for helping another company falsify its reported financial reults. ... Several former GenRe executives, including Ronald Ferguson, the former chief executive, and Elizabeth Monrad, the former chief financial officer, were convicted in 2008 on charges that in 2000 and 2001 they helped AIG--which was then a client--improperly inflate its loss reserves, a key indicator of financial health, by $500 million", Amir Efrati at the WSJ, 21 January 2010:

http://online.wsj.com/article/SB10001424052748704320104575015131135869288.html.

Corporate governance is a scam. This is another joint SEC-DOJ failure to enforce the law.

Wall Street Control of DOJ Continues

"The White House announced on Wednesday that President Obama would nominate Loretta E. Lynch as the [US] attorney for the Eastern District of New York, setting her up for a return to a post she held at the end of the Clinton administration. ... Ms. Lynch, who could not be reached for comment, has held a range of positions in the Eastern District, where she began working in 1990. During her tenure as the head of the office, from 1999 to 2001, she oversaw the Abner Louima police brutality case and its aftermath. ... Ms. Lynch is a partner at Hogan & Hartson [H&H], a private law firm that focuses on commercial litigation, white-collar criminal defense and corporate compliance issues. She is also a member of the New York State Commission on Public Integrity, an ethics and lobbying oversight body", AG Sulzberger at the NYT, 21 January 2010, link:

http://www.nytimes.com/2010/01/21/nyregion/21prosecutor.html.

Lynch is another Mary Jo White, a "ping-pong ball" Fed. Do we know H&H? Sure. John Roberts is a H&H "alumnus". Do NY Biglaws has a secret oath like I assume Vampire Squid does, which means the only way you leave a NY Biglaw is by death?

Blackwater's Black Hats-2

"The scandal is that the [DOJ's] case against five former security guards for the military contractor unravelled late last week in what appears to be another instance of gross prosecutorial misconduct, as abusive Justice lawyers went after an unsympathetic political target. ... Because of prior contact with the compelled statements, the [DOJ's] entire criminal division had recused itself from the case, which was handed over to national-security prosecutors and later to Assistant US Attorney for the District of Columbia, Kenneth Kohl. ... The judge goes on to say that Justice's 'inconsistent, extraordinary explanations' for its conduct 'smack of post hoc rationalization and are simply implusible,' and ultimately 'lacking in credibility.' ... Something is rotten in the culture of Justice, leading ambitious government crusaders to think they can get away with flouting due process when the political winds are blowing hot", WSJ editorial, 4 January 2010: http://online.wsj.com/article/SB10001424052748704065404574636170633783890.html.

The DOJ prosecutors must have thought they were operating under Iraqi criminal procedure. They apparently didn't realize they are still in the US. This case stank.

UBS Deal Collapses?

"A Swiss court ruled Friday that Swiss authorities may not disclose the account details of a wealthy American who used UBS's private bank to evade American taxes. The ruling, by the Swiss federal administrative court, threatens to open fresh legal challenges from American prosecutors of the Swiss banking giant UBS in what has become a protracted dispute between the two countries. It threatens to topple an agreement reached last August between Switzerland and the [DOJ] that requires Swiss tax authorities to disclose to the [IRS] the names of 4,450 American clients of UBS suspected of evading [US] taxes. ... Should the suit be revived, it could also jeopardize a separate deal last February in which UBS averted indictment by agreeing to pay $780 million to the [US] government and admitting criminal wrongdoing in the offshore private banking services it sold to wealthy Americans. ... In a statement, the IRS said Friday that 'We have every expectation that the Swiss government will continue to honor the terms of the agreement.' ... Friday's ruling is the second by a Swiss court to challenge the disclosure of client names. On Thursday, Swiss regulators said they would appeal a separate ruling by a Swiss court that said the Swiss regulators broke secrecy laws when they authorized UBS to hand over the names of 255 clients as part of the $780 million deal last February. The Swiss regulatory agency, Finma, said Thursday that it handed over the names because the possibility of an indictment of UBS 'would have threatened its existence'," Lynnley Browning (LB) at the NYT, 23 January 2010, link: http://www.nytimes.com/2010/01/23/business/23tax.html.

"The Swiss government on Wednesday backed off an agreement with the [US] that required it to hand over the names of wealthy American clients of the Swiss bank UBS who were suspected of tax evasion. ... The Swiss cabinet said it might put the disclosure of the names up for approval before the Swiss parliament--but only if if received detailed information from the [IRS] on how many UBS clients had come forward under a voluntary disclosure program that ended in November. ... IRS officials said Wednesday that Switzerland needed to hew to the August deal. 'We expect the Swiss government ot continue to honor the terms of the agreement,' the agency said in a statement. The [DOJ] declined to comment. ... Kevin E. Packman, a tax lawyer at Holand & Knight in Miami, said that the Swiss courts 'have put UBS and, so some extent the Swiss government in an uncomfortable position. I suspect that if the courts don't cooperate with the government to find a solution, things are going to get really ugly for UBS", LB at the NYT, 28 January 2010, link: http://www.nytimes.com/2010/01/28/business/global/28ubs.html.

The Swiss buckle to the IRS, when they wouldn't to Adolph Hitler. Wow. That's clout. The Swiss should have told the IRS, "Indict UBS. Fair enough. We'll indict Citigroup and raise you a Vampire Squid (VS). Your turn".

No problem. Invade Switzerland! Wait, even Hitler didn't do that. I have a better idea for the Swiss. Threaten to indict Citigroup and VS for violating Swiss banking laws. I'm sure if the Swiss regulators look, they'll find something.