Tuesday evening, the lawyer for porn star Stormy Daniels, Michael Avenatti dropped a bombshell revealing that Donald Trump’s attorney Michael Cohen received $500,000 from Russia oligarch Viktor Vekselberg after the 2016 presidential election. The story was corroborated by The New York Times and The Washington Post Today it was reported that there were also payments …
Tag: Money Laundering
May 09 2018
Mar 07 2018
Back in January 2017, Erik Prince, the founder of Blackwater and an informal adviser to Mr. Trump’s team during the presidential transition, had a clandestine meeting in the Seychelles with Crown Prince Mohammed bin Zayed Al-Nahyan, the ruler of the United Arab Emerites (UAE). It was revealed in April that the purpose of that meeting …
Jan 19 2018
Early on in a story by McClatchy reporters, Peter Stone and Greg Gordon, it was revealed that the FBI was investigating whether Russian money went to the National Rifle Association to help the Trump campaign, The FBI is investigating whether a top Russian banker with ties to the Kremlin illegally funneled money to the National …
Dec 06 2017
It was reported yesterday that Special Counsel Robert Mueller had subpoenaed the bank records of the Trump family from Deutsche Bank. Duetsche Bank has a rather dubious history of laundering money for everyone from drug lords to arms dealers to oligarchs. Just this psst January, the bank was fined $620 million for its part in …
Dec 05 2017
The Special Counsel Robert Mueller is moving right along. Former Trump campaign manager Paul Maanfort had come to a bail deal that acceptable to the court and Mueller’s office. Problem is that these guys have such huge egos they think they can flout the rules: Former Donald Trump campaign chairman Paul Manafort was, as recently …
Aug 31 2017
Last night Politico reported Special Counsel Robert Mueller has teamed up with New York State Attorney General Eric Schneiderman on the case of former Trump campaign manager Paul Manafort. Part of the reason for the duel investigation is the possibility that Trump will pardon Manafort and others of federal charges involving the Trump campaign’s conspiring …
Jul 21 2017
In his interview with New York Times reporters Peter Baker, Michael S. Schmidt and Maggie Haberman Donald Trump said that Special Counsel Robert Mueller investigating his family’s finances would be a “red line.” SCHMIDT: Last thing, if Mueller was looking at your finances and your family finances, unrelated to Russia — is that a red …
May 12 2017
More and more the Russian investigation is becoming about the money. Senator Ron Wyden (D-OR), member of the Senate Finance and Intelligence Committees, spoke with MSNBC’s Rachel Maddow about why he thinks the Trump-Russia investigation should focus on Donald Trump’s business ties. From Steve Benen at Maddow Blog: In his interview yesterday with …
Mar 13 2013
Once again Sen. Elizabeth Warren demonstrated why the voters of Massachusetts sent her to the Senate when in a Senate Banking Committee hearing about money laundering, she questioned why British bank HSBC is still doing business in the U.S., with no criminal charges filed against it, despite confessing to what one regulator called “egregious” money laundering violations
Her comments came just a day after the attorney general of the United States confessed that some banks are so big and important that they are essentially above the law. His Justice Department’s failure to bring any criminal charges against HSBC or its employees is Exhibit A of that problem.
(..} Warren grilled officials from the Treasury Department, Federal Reserve and Office of the Comptroller of the Currency about why HSBC, which recently paid $1.9 billion to settle money laundering charges, wasn’t criminally prosecuted and shut down in the U.S. Nor were any individuals from HSBC charged with any crimes, despite the bank confessing to laundering billions of dollars for Mexican drug cartels and rogue regimes like Iran and Libya over several years.
Defenders of the Justice Department say that a criminal conviction could have been a death penalty for the bank, causing widespread damage to the economy. Warren wanted to know why the death penalty wasn’t warranted in this case.
“They did it over and over and over again across a period of years. And they were caught doing it, warned not to do it and kept right on doing it, and evidently making profits doing it,”
“How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”
“You sit in Treasury and you try to enforce these laws, and I’ve read all of your testimony and you tell me how vigorously you want to enforce these laws, but you have no opinion on when it is that a bank should be shut down for money laundering?”
“If you’re caught with an ounce of cocaine, the chances are good you’re gonna go to jail. If it happens repeatedly, you may go to jail for the rest of your life,” Warren said. “But evidently if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your bed at night — every single individual associated with this. And I think that’s fundamentally wrong.”
As staunch an opponent of the death penalty as I am, I would have voted for it and watched the “execution” of HSBC with glee.
Dec 19 2012
Last summer it was revealed that one of the world’s largest banks based, HSBC, base in Britain, had been laundering billions of dollars for Mexican drug cartels and skirting US government bans against financial transactions with Iran and other countries that aid Al Qaeda and other terrorist groups. In a stunning move during a hearing before the Senate Permanent Subcommittee on Investigations chief compliance officer, David Bagley, took the blame and resigned.
Last week the federal government and New York State announced a settlement with HSBC:
In a filing in Federal District Court in Brooklyn, federal prosecutors said the bank had agreed to enter into a deferred prosecution agreement and to forfeit $1.25 billion. The four-count criminal information filed in the court charged HSBC with failure to maintain an effective anti-money laundering program, to conduct due diligence on its foreign correspondent affiliates, and for violating sanctions and the Trading With the Enemy Act.
“HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries,” Lanny A. Breuer, the head of the Justice Department’s criminal division, said in a statement. [..]
HSBC, based in Britain, has also agreed to pay the Office of the Comptroller of the Currency, one of the bank’s central regulators, an additional $500 million as part of a civil penalty. The Federal Reserve will be paid a $165 million civil penalty. [..]
HSBC also entered into a deferred prosecution agreement with the Manhattan district attorney’s office. As part of that agreement, HSBC admitted that it violated New York State law.
Just like the mortgage and banking fraud that was uncovered during the financial crisis, there will be no criminal charges. The fines that were levied are tantamount to about five weeks of income for the bank. Contributing editor for the Rolling Stone, Matt Taibbi points out the outrageous incongruity of this settlement:
If you’ve ever been arrested on a drug charge, if you’ve ever spent even a day in jail for having a stem of marijuana in your pocket or “drug paraphernalia” in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me. [..]
The banks’ laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC’s Mexican branches and “deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows.”
This bears repeating: in order to more efficiently move as much illegal money as possible into the “legitimate” banking institution HSBC, drug dealers specifically designed boxes to fit through the bank’s teller windows. [..]
Though this was not stated explicitly, the government’s rationale in not pursuing criminal prosecutions against the bank was apparently rooted in concerns that putting executives from a “systemically important institution” in jail for drug laundering would threaten the stability of the financial system. The New York Times put it this way:
Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system. [..]
So there is absolutely no reason they couldn’t all face criminal penalties. That they are not being prosecuted is cowardice and pure corruption, nothing else. And by approving this settlement, Breuer removed the government’s moral authority to prosecute anyone for any other drug offense. Not that most people didn’t already know that the drug war is a joke, but this makes it official.
Apparently this settlement has garnered some bipartisan concerns from Senators Jeff Merkley (D-OR) and Charles Grassley. In separate statements released from their offices, they criticized the Justice Department for not sending a stronger message to the banking industry. Sen. Grassley said it best:
The Department has not prosecuted a single employee of HSBC-no executives, no directors, no AML compliance staff members, no one. By allowing these individuals to walk away without any real punishment, the Department is declaring that crime actually does pay. Functionally, HSBC has quite literally purchased a get-out-of-jail-free card for its employees for the price of $1.92 billion dollars.
There is no doubt that the Department has “missed a rare chance to send an unmistakable signal about the threat posed by financial institutions willing to assist drug lords and terror groups in moving their money.” One international banking expert went as far as to argue that, despite the “astonishing amount of criminal behavior” from HSBC employees, the DPA is no more than a “parking ticket.”
But, as David Dayen at FDL News notes there are crickets from certain key senators:
Matt Stoller makes a very good point here: where is Patrick Leahy on this? He has made no public statement on the HSBC case, despite being the co-author of the Fraud Enforcement and Recovery Act, which was supposed to deliver funds toward prosecuting fraudulent big bank activity (it never actually did). Grassley, a co-author, has spoken out. Why not Leahy?
Transcript can be read here
Now, not only are the banks “too big to fail“, they are “too big to jail.”
Aug 17 2012
No agreement is perfect but the settlement that was reached Tuesday afternoon with the New York Department of Financial Services over Standard Charter Bank’s illicit money laundering with Iran and other countries under sanctions was better than most. In particular, SBC’s admission that the “the conduct at issue involved transactions of at least $250 billion.” The fine of $340 million was larger than the $250 million SBC offered but smaller than either the $700 million to $1 billion that SBC might have had to pay if the case had gone to a hearing on Wednesday and large because of the multi-billion dollar transaction admission. So the agreement is being touted as a victory for Benjamin M. Lawsky and his 10-month old agency, the New York Department of Financial Services which took on the bank without the Federal agencies who have been negotiating with SBC.
STATEMENT FROM BENJAMIN M. LAWSKY, SUPERINTENDENT OF FINANCIAL SERVICES, REGARDING STANDARD CHARTERED BANK
Benjamin M. Lawsky, New York Superintendent of Financial Services, issued the following statement today.
“The New York State Department of Financial Services (“DFS”) and Standard Chartered Bank (“Bank”) have reached an agreement to settle the matters raised in the DFS Order dated August 6, 2012. The parties have agreed that the conduct at issue involved transactions of at least $250 billion.
“The settlement also includes the following terms:
- The Bank shall pay a civil penalty of $340 million to the New York State Department of Financial Services.
- The Bank shall install a monitor for a term of at least two years who will report directly to DFS and who will evaluate the money-laundering risk controls in the New York branch and implementation of appropriate corrective measures. In addition, DFS examiners shall be placed on site at the Bank.
- The Bank shall permanently install personnel within its New York branch to oversee and audit any offshore money-laundering due diligence and monitoring undertaken by the Bank.
“The hearing scheduled for August 15, 2012 is adjourned.
“We will continue to work with our federal and state partners on this matter.”
This settlement is only with the New York regulator and it includes the transfers with Libya, Mynmar and the Sudan.
While this could have been better, Mr. Lawsky did get the bank to concede that the transfer did indeed involve the $250 billion which resulted in a larger settlement. SBC still must deal with the federal regulators based on the concession with NYDF. As David Dayen at FDL sees it this put a whole new slant on those talks:
In addition, this does not end the legal trouble for Standard Chartered. This only resolves the issues with the New York Department of Financial Services. Federal regulators (including Treasury, the Federal Reserve and the Justice Department) as well as the Manhattan District Attorney must now enter into their negotiations, and if they cannot get as much as the DFS, it will be completely embarrassing. This could cost Standard Chartered at least double this initial figure.
Meanwhile over at the SEC, Wells Fargo walks away from mortgage investment case with a $6.5 million fine and no admission of wrongdoing as usual. Wells Fargo earned $16 billion last year.
The Securities and Exchange Commission has spent nearly four years building cases against the nation’s biggest banks for their role in the mortgage mess.The agency has filed civil actions against Goldman Sachs, JPMorgan Chase and Citigroup.
But in recent months, the agency has struggled to bring big cases as it pursued a second round of investigations focused on the banks’ failure to disclose the dangers of mortgage securities. The Wells Fargo case comes just days after Goldman Sachs revealed that the S.E.C. had closed an investigation into a 2006 mortgage deal without pursuing charges. [..]
The action also cited Shawn McMurtry, a former vice president and broker at the bank, over his role in selling the deals. Under the settlement, Mr. McMurtry agreed to a $25,000 fine and six-month suspension from the securities industry.
I’m sure Mr. McMurtry can afford it.
Aug 12 2012
Yves Smith at naked capitalism and Marcy Wheeler at emptywheel have been following the latest banking scandal with a certain amount of “glee” as New York Superintendent of Financial Services, Benjamin Lawsky, Federal regulators (mainly Treasury and the Federal Reserve) and Mr. Lawsky’s target, the British bank, Standard Charter, all do the “Rule of Law” waltz in the media.
The “dance” so far has resulted in a flurry of furious responses to Mr. Lawsky’s charges that the Standard Charter Bank (SCB) laundered billions of dollars for Iran hiding the transaction from federal investigators for 10 years.
These are the latest developments over the last few days since the story broke:
First from Yves where she confesses her enjoyment of the “dust up” and the latest counter by SCB to sue Mr. Lawsky:
The lead story in the Financial Times on SCB is so obviously barmy that I’m astonished that the pink paper would give it prominent play. The headline: StanChart seeks advice over countersuit. Even floating this as an course of action reeks either of desperation to create positive news hooks or delusion:
The bank’s legal advisers believe “there is a case” for claiming reputational damage, according to two people close to the situation, although StanChart is conscious of the delicacy of taking an aggressive stance towards its regulators.
The whole “delicacy” part is code for this having odds of close to zero of happening, so this looks like yet more spin.
The damage was done by the threat to yank the license and access to dollar clearing services, not the “rogue institution” label in the order. And as we’ve written in earlier posts, despite the spinmeister’s efforts to contend otherwise, Lawsky has cited violations of New York law that appear to let him get there, in addition to the charge under the Federal laws on transfers to Iran.
Yves notes that the likelihood of this lawsuit going forward is “zero” since the risk of losing in a NY civil court and the exposure of any other damning evidence that the superintendent has would be a disaster for SCB.
She also highlighted a comment made by Frank Partnoy, former derivatives salesman, now law professor, who noted:
Indeed, the order puts the bank’s senior attorneys and compliance officers at the heart of the wire stripping scheme, even when outside counsel advised otherwise. As early as 1995, soon after President Bill Clinton announced economic sanctions against Iran, the bank’s general counsel allegedly “embraced a framework for regulatory evasion”. He allegedly strategised about how to avoid scrutiny by the US Office of Foreign Assets Control, known as OFAC, and instructed employees that a memorandum describing the plan to avoid regulatory compliance was “highly confidential & MUST NOT be sent to the US”….
As recent debacles at Barclays, HSBC and now Standard Chartered demonstrate, employees of big global banks increasingly lack a moral compass. Some general counsels and compliance officers do provide ethical guidance. But many are facilitators or loophole instructors, there to show employees the best way to avoid the law. Not even mafia lawyers go that far; unlike many bankers, mobsters understand the value of an impartial consigliere who will tell them when to stop.
The Reuters article was a pretty damning picture of how the Get Out of Jail Free industry works.
And then, the most damning parts of the article disappeared (Update from Briinhild: the full story is back up). As Yves discovered later in the day yesterday, Reuters pulled those paragraphs of the story that described this whole process.
Yves then posted that Reuters was running interference for elite corruption by scrubbing the article clean of the damning parts and posted original Reuters’ article:
Now I decided to go have a look myself. Being on the vampire shift, I didn’t go looking until mid afternoon. And guess what, the story that was now at that URL was not the same story. Yes, there was a story on Standard Chartered. But the version that Marcy worked from was apparently the original, released at 00:28 AM, titled “U.S. regulators irate at NY action against StanChart.” I’ve loaded that version in a Word and put it up at ScribD, and am embedding it below. It’s 1766 words. Be sure to download it if you are interested in this topic.
Apparently, as was pointed out by an emptywheel reader, Briinhild, Marcy and Yves must have embarrassed Reuters because they reposted the original article later that day.
The latest today from Yves, this “plot thickens” as Federal regulators try to “leash and collar” Superintendent Lawsky:
Today, the Wall Street Journal reported that, “Regulators Seek Unity in U.K. Bank Talks.”
If you read the article, a more accurate headline would be “Federal regulators desperate to get in front of Lawsky mob and call it a parade.” All the article says is the mucho unhappy and very much outflanked Federal regulators have gotten a meeting with Lawsky. Just look at the disconnect between the PR in the first paragraph and the actual state of play in the second:
U.S. authorities are forming a group with New York’s top financial regulator to negotiate a settlement with Standard Chartered over allegations it illegally hid financial dealings with Iran.
The U.S. Treasury Department, Federal Reserve, U.S. Department of Justice and Manhattan district attorney’s office are scrambling to reach an understanding with the New York State Department of Financial Services over the ground rules for negotiations with the U.K.’s fifth-largest bank by assets, according to people familiar with the talks.
This is hysterical. “Ground rules for negotiations”? Lawsky does not need the permission of Geithner et. al. to negotiate with Standard Chartered. As long as Lawsky has Cuomo’s backing, he has all the leverage here. And three independent sources told me as of today that Cuomo was fully behind Lawsky. That means he is likely to remain free to operate as he sees fit. It’s a given that if the White House had any real sway over Cuomo and saw fit to intervene, they would have done so by now. There is no downside to Lawsky in going through the motions of seeing if there is a way for him to proceed and have the Feds save a bit of face.
Let me stress again: Lawsky has all the cards, and he must know that.
Yves also cites this article from Bloomberg:
New York’s financial-services regulator has grounds to shut Standard Chartered Plc (STAN) in the state even if he accepts the firm’s argument that it illegally laundered only a fraction of the $250 billion he claims.
As the state’s top banking regulator, Benjamin Lawsky has power to act in his discretion against any financial institution he deems untrustworthy, according to the charter of his year-old department.
Penalties he could impose include fines and the revocation of the bank’s license to operate in the state…
Even if Standard Chartered’s position is legally sound, the order’s disclosure of internal e-mails suggesting a conspiracy to hide the identity of Iranian clients from regulators has given Lawsky grounds to act when the two sides face off at an administrative hearing Aug. 15, according to experts on both sides of the Atlantic.
“I don’t care whether it is a half of one percent that weren’t right,” said Arthur Levitt, former chairman of the Securities and Exchange Commission,…
“There are going to be more that weren’t right…The e-mails are really outrageous. I think Lawsky has uncovered something that probably has a much deeper depth.”…
Neil Barofsky, who oversaw the U.S. Troubled Asset Relief Program and criticized the U.S. Treasury Department in his book, Bailout, objected to the criticism heaped on Lawsky.
“This is not Lawsky getting ahead of other regulators,” said Barofsky. “This is Lawsky doing his job.”…
“Willful non-compliance is very serious,” said Tariq Mirza, a former Federal Deposit Insurance Corp. official now with Grant Thornton. “If those allegations can be substantiated, regulators throw the book at institutions.”
Another article from the International Business Times that speculates what SBC’s sentence would be if it were an individual found guilty of these crimes:
Under New York state statutes against those two crimes, a defendant found guilty could be sentenced to a penalty of between eight-and-one-third and 25 years. The attorney noted that “it seems likely that a maximum sentence would be given because of the extent of criminality alleged in this case.” And if the judge really wanted to throw the book at them, the attorney explained, they could consider every instance where Standard Chartered Bank engaged in alleged illegal conduct, no doubt hundreds of them, as a “discrete act of criminality” rather than “one criminal transaction.”
Federal involvement would make the possible prison term even stiffer, with the appropriate federal money-laundering statute carrying a penalty of “roughly 15 to 19 years,” and a racketeering conviction “punishable by up to 20 years” in Club Fed.
Wouldn’t that be a delightful sight?
As Yves notes in her discussion of these news articles, there is a lot of spin or, as with the case of a New York Times article, misinformation:
There is also an article at the New York Times on Lawsky which comes close to being a hatchet job. It does not look as if the Times made any effort to get to anyone in Lawsky’s camp (by contrast, I know of at least one reporter working on a profile who says everyone who Lawsky has worked with him is extremely complimentary). It also has sources that are spinning (one might say misrepresenting) the genesis. It acknowledges that Lawsky discussed his findings and theories, so it undermines the “blindsided claim. We were told three months ago, with the Fed; the article says April, so this is pretty close to the same time frame and sounds like the same meeting. [..]
The traditional MSM is going to do a lot of the work for federal regulators by sniping at Mr. Lawsky and painting him as a “rogue” and “over-stepping his authority”. It’s bloggers like Marcy Wheeler and Yves Smith that sort out the facts from the hype and innuendo. The ladies rock.
As Yves requested, if you live in New York and support what Mr. Lawsky is doing, especially since the New York Times is taking shots at him now, drop him a note using this form.
Thanks and a h/t to naked capitalism reader Bryan Sean McKown for the title.