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Supreme Court on a Knife edge

  Uploaded - Thursday, October 04, 2018

Supreme Court on a Knife Edge

Highland Capital v Credit Suisse

Around a half billion dollars hang on an abstruse quirk. It will be another test for the legitimacy and repute of the country’s courts, already seriously damaged in public opinion.

The Texas Supreme Court has discretion to decide on a legal quirk with massive consequences, both for the litigants, and for the country. 

The public is desperate that a senior court shows it stands for real justice – and not “politics”.

If state supreme courts go the way of SCOTUS, a polarized public could lose faith, predisposing the country to civil disorder and inability to cope with the next crisis.

The Texas Supreme Court will shortly decide Credit Suisse v Highland Capital fund Claymore Holdings. Only around $212 million is directly at stake, but parallel litigation in New York (Allenby etc) takes the total consideration to just short of a billion dollars.

The legal question is an abstruse quirk without clear statutory guidance. It is on a knife-edge despite the facts having been determined at trial.

The money either goes to a huge criminal bank which helped cause the financial crisis (with other banks) and sabotaged the tax system – or to an honest investment fund.

URGENT: Amici Curiae Desperately Needed

The justice issues are crystal clear. 

The trial found that the bank had committed fraud. It had engineered a fake / fraudulent / non-existent appraisal to justify a corrupt loan which inevitably collapsed. The deceit was stunningly similar to its fake appraisals which contributed to the financial crisis.

The bank claims it should pay nothing – because its disclaimers permitted such fraud, although it concedes that the contract required a legitimate appraisal. This discussion will assume that the bank loses this argument (it is not certain).

The main argument is whether the bank should pay around $40 million or around $212 million.

The decision could go down to the whim and mood of the justices – so amici curiae are desperately needed.

I have the background and the main filings, so contact me if you are interested.

Legalese or Legal Sleaze? 

The bank is appealing the $212 million award of rescissory damages. These can only be granted if “damages cannot be determined with reasonable certainty or precision.” Technically, a judge can order that a contract be rescinded to bring the parties back to where they were initially, and award damages. These are rescissory damages. 

The judge and the appeals court ruled rescissory damages were appropriate.

The bank claimed the opposite, and that $40 million is most it should pay.

The case is being tried under New York state law and Texas procedure in Austin. 

There is an excellent RICO statute (triple damages) under New York law with helpful provisions for out of state parties. 

Highland could claim RICO damages in parallel to rescissory damages, just in case it loses the main argument. The justification: the facts of the matter were fraudulently concealed by the bank and only adequately exposed recently at trial. 

The above description is a simplification which should not be relied upon absent independent research. The main filings are here.

Extracts from the Trial Judgement:

40.          In response to Prawer's email, Credit Suisse banker Dana Klein exclaimed: "This appraisal does not work! How could it go from 750 to 522???? At this level we don't have a deal we can sell." Klein explained this exchange in his June 30, 2014 deposition by stating, "my assumption would be that if I—if he had an appraisal at 750 million versus a loan of 540, that that was an acceptable loan value for syndicated—syndicating a new deal. And that if the 750 was reduced to 522 million, that against a 540 loan value we could not sell a deal." (See, e.g., PX129; June 30, 2014 Depo. Tr. of Dana Klein at 271:21-272:7.)

44.          In the early morning hours of April 22, 2007, Credit Suisse investment banker Arik Prawer emailed his team and asked them to assemble in the office for a pre-call "strategy" meeting three hours before the call with Acton. Prawer expressed his concern: "Sun will be key day—very uncertain about how appraisal cony will go and impact on our deal—Can we caucus at the office on Sunday at my office at 11 am—we need to strategize nad [sic] fig out a plan here." (PX28.)

45.          During this same time period, the Borrowers were scrambling to analyze Acton's new DCF value as well. In the late night hours of Saturday, April 21, 2007, and continuing until the next day, the Borrowers engaged in an email discussion whereby Terry Hodder, the Borrowers' tax director, proposed using an approach that did not discount the values back to the valuation date of March 31, 2007, but instead to a later point in time, which would have the effect of increasing value. Cox and David Voorhies, another Lake Las Vegas finance executive, responded to Hodder, "I like your answers..." and asked "Is T. Hodder Assoc's a nationally recognized appraisal firm we could use?" Acton ultimately adopted this idea in the Appraisal. (See, e.g., PX3; PX300.)

46.          Shortly before the April 22 call, Acton "reran the numbers as requested" and circulated further adjusted numbers that raised the NPV of the Development to $440.6 million with no View Premiums and $521.4 million with View Premiums on unsold land only. This estimate, and all estimates before the April 22 call, discounted the value of the Development's cash flows back to January 1, 2007. (See, e.g., PX29.)

47.          At least five Credit Suisse representatives, the Borrowers, and Acton were invited to attend the April 22 call. At trial, every Credit Suisse and Borrower participant on the April 22 call testified (Acton is deceased) either live or by deposition. The Credit Suisse bankers (the entire investment banking team led by Prawer and Adam Searles of Capital Markets) and David Cox, the CFO of the Borrower, claimed to be unable to recall even a single detail about the call or what was discussed. In fact, Prawer testified that notwithstanding all of the contemporaneous emails demonstrating his attendance and the importance of the appraisal and the urgency of their work during that weekend, "I am not even sure I attended the call." (See, e.g., PX20; June 3, 2015 Afternoon Trial Tr. at 130:12-23.) Having evaluated the demeanor and body language of the witnesses during their testimony, the Court finds the testimony of the Credit Suisse and Borrower witnesses collective inability to recall what was discussed on the telephone call is not credible.
48. Regardless of the consistent inability of the Credit Suisse bankers and Borrower representatives to recall any details from that April 20-22, 2007 weekend, the contemporaneous emails and DCF drafts demonstrate that Acton was asked to make several material changes to his "independent" valuation. Within hours of the April 22 call, Acton sent Credit Suisse "revised DCF calculations with no views and some views" using the "adjusted dcf period" suggested by Credit Suisse and the Borrowers, and stated that he would "discuss lot & golf absorption with LLV officials Monday AM." As a result of this one change to the discounting methodology, the NPV for the no View Premiums scenario increased from $440.6 million before the call to $512.1 million after the call, and the NPV for the unsold View Premiums scenario increased from $521.4 million before the call to $605.9 million after the call. (See, e.g., PX 30.)

49.          When forwarding Acton's revised analysis to other members of the Credit Suisse team, Kao explained that it "reflects change to the discounting method as discussed on the call. This does not account for moving sales up to earlier periods, which he will provide tomorrow." Jenkin likewise noted in an email to the Borrowers that Acton "has adjusted the discounting formula as requested. We are still waiting for a final version incorporating the sales timing changes that were discussed." (See, e.g., PX3 1; PX33.)
50. …… And by their own admission, Credit Suisse knew it was "wrong" to discount the cash flows back to January 1, 2008 for a valuation as of March 31, 2007.
51. Credit Suisse knowingly chose not to correct the discounting error in the Appraisal. Credit Suisse knew that fixing the error would materially reduce the appraised value of the Development. On April 24, 2007, Kao explicitly instructed Jenkin: "Use Acton's numbers (we're going to maintain ignorance on the NPV analysis be his is higher than ours)." The documents show and the Credit Suisse investment bankers admitted that they obtained Acton's DCF spreadsheets and "checked the math" and knew how he had performed his discounting before they posted the appraisal. Accordingly, I find that Credit Suisse knowingly chose to provide the lenders in the Refinancing with an Appraisal that had a material discounting mistake of between $54 million to $94 million.

Monstrous Hypocrisy Continues

  Uploaded - Friday, September 21, 2018


Monstrous Hypocrisy Continues

The Swiss banking regulator, FINMA, criticized Credit Suisse for billion dollar money laundering - but there was NO PENALTY!! See details below.

CS Wants Court Approved Fraud: Highland Capital v Credit Suisse

The jury found that the bank committed fraud in deceiving Highland Capital into financing its shonky real estate development.

But the bank claims that its contract allowed it to do this without penalty:

It claims that its contract, which demanded a legitimate land valuation, allowed it to submit a fake / manipulated / nonexistent one - that it had contrived in conspiracy with the valuer.

The bank's filing uses "intimidating language" which threatens that the state will lose "business" if it has to pay compensation for its fraud:

"If left uncorrected, parties will quite reasonably doubt whether their agreed-upon allocations of responsibility in high-stakes, complex financial transactions will be honored by Texas courts."

No Amicus Curiae Brief Submitted Yet!

Usually, groups wanting to support justice and honesty in banks would submit a "Friend of the Court Brief" called an amicus curiae brief.

Supreme courts around the country can be "stacked" with "business friendly" judges who might "bend legal interpretations" in a way which effectively legalize what ordinary people regard as crime.

The "legalizing of crime" may take the form of making it impossibly difficult to get justice through the courts. Credit Suisse enabled the Enron fraud (with other banks) but paid virtually nothing because "business friendly" judges ruled that every pensioner victim had to sue the bank individually, not in a class action - impossible. The US banks 'fessed up and paid billions in compensation to the pension funds, but not Credit Suisse.

I can see the Texas case going the same way unless there are sufficient amici curiae briefs to encourage judges to value honesty over fraud.

Any group interested in submitting a brief should contact me for detailed information.
CS "rebuked" for billion dollar crime

The Swiss banking regulator, FINMA, criticized Credit Suisse for billion dollar money laundering - but there was NO PENALTY!!

FINMA also refused to see me or receive my detailed reports of crime in Credit Suisse. Not long afterwards, that bank was officially criminally convicted.

CS rebuked for getting caught?

FINMA was unclear whether the bank was rebuked for the crime or for getting caught. An unpunished billion dollar crime is simply an invitation for a repeat performance (seriously ....!)

It looks more like a piece of advice, e.g.:
"Hey Crooked Suisse! Naughty! That was careless of you. Look! People found out that you laundered a lot of money. We will help you do better at hiding that in future, and publish a bunch of ways to improve concealment. No penalty, just friendly advice."

No Surprise: Problem Known for 29 Years

Multiple cases of ridiculous money laundering by the bank have been documented over nearly 30 years, so the Swiss authorities knew that they have been condoning crime.

Switzerland: A Predator in International Finance - 2001

In 2001, a 400 page French Parliament investigation described Swiss efforts to combat money laundering as a facade.  Download the 400 page PDF here.

It described Switzerland as a predator in international finance. The BBC reported that the Swiss denounced the report:

"A spokesman for the Swiss Bankers Association said the report's authors came to Switzerland with their eyes shut and only wanted to reinforce their preconceptions. 
Meanwhile, the Swiss Association of Private Banks described the report as biased and accused the French parliamentarians of having abused the hospitality offered to them in Switzerland."

Credit Suisse in Billion- Dollar Laundering Scheme - 1989

In 1989, Time Magazine reported on rampant money laundering through Switzerland and through Credit Suisse in particular. Here is an extract from that 1989 article:

Monday, Apr. 24, 1989
Crackdown on The Swiss Laundry
By Christine Gorman

"Behind every successful drug syndicate lies a complex mechanism for recycling bundles of tainted cash into respectable assets. But until two years ago, when Los Angeles narcotics officers seized three Zurich-bound suitcases stuffed with $2 million in currency, there was little hard evidence to implicate the venerable granite-walled banks of Switzerland in such schemes. Since then Swiss banks have been chastened by the disclosure that their accounts were used in a billion-dollar money-laundering operation. The resulting political scandal, in which the Justice Minister was forced to resign, ranks as the worst in modern Swiss history.

In response, the Swiss government has promised to draft tough anti- laundering legislation by mid-May. Last week the federal banking commission announced that it will introduce stiff regulations on bank-note trading to prevent drug traffickers and other criminals from using the country's famed secret bank accounts. The commission also published a 28-page report that faulted Credit Suisse, which handled the bulk of the money in the billion- dollar scheme, for inadequately supervising its accounts.

Money laundering is not a crime in Switzerland unless it can be shown that the cash flows from criminal activities. Yet Switzerland is a magnet for money launderers because of its legitimate multibillion-dollar trade in foreign bank notes. As much as 3,000 lbs. of foreign currency arrives daily at Zurich's Kloten airport."

Crackdowns in 1989, 2001, 2018: Nothing Changed ......

Seriously, billion dollar crimes in 2018 and the Swiss just chastises the bank!

One law for all – or there is no law at all!

The public are sick of the hypocrisy and so desperate, that populist leaders will get elected regardless of their ability.

Here are a selection of recent media reports for which the bank was "scolded".
Nothing for the victims, of course.

Nothing for the victims, of course

SwissInfo - Credit Suisse/Finma: the usual suspects
Who could ever have suspected it? Weak money-laundering defences at a Swiss bank, of all places. And in relation to Fifa and Petrobras, those beacons of moral probity. Thank heavens regulator Finma has shown how seriously Switzerland regards lapses at Credit Suisse. It has issued a press release.
Enough sarcasm. European banking has a lucrative history of controls lax enough for money laundering and tax evasion to flourish. Tighter public morality is making this expensive for shareholders and bosses, as scandals at Danske and ING illustrate.
Further trouble may be brewing. Finma has been probing several banks in relation to suspected corruption at Fifa, which runs world football, and to Petrobras of Brazil and Venezuela’s PDVSA. 

The Swiss bank (CS) hardly smells of roses. Finma identified a second set of breaches evidently related to Patrice Lescaudron. The Credit Suisse manager was jailed for five years in February for frauds against former Georgian premier Bidzina Ivanishvili, among others. Tempting fate - and the judge - he wore a Ferrari fleece to court.

Bloomberg - Credit Suisse Scolded for Failing to Rein in Rogue Banker
Finma identified deficiencies in the bank’s anti-money laundering controls as well as shortcomings in its oversight of the manager, identified as Patrice Lescaudron. .... Lescaudron was convicted in February and sentenced to five years in prison for perpetrating an eight-year scheme in which he made unauthorized trades and faked purchase orders .... Lescaudron’s activity, which began in 2007, went undetected by Credit Suisse and his clients ....
“Instead of disciplining the client manager promptly and proportionately, the bank rewarded him with high payments and positive employee assessments,” Finma said, adding that oversight was “inadequate” because of his special status.

Bloomberg - Video
The commentators sarcastically imply that the bank's claim that "Lescaudron was a lone rogue" was typical of a cover-up.

Bloomberg Video - Credit Suisse Scolded by Finma for Rewarding Rogue Banker
Credit Suisse Group AG was scolded by Switzerland's financial regulator, but escaped any real penalties for its failure to properly oversee a former wealth manager convicted of fraud. 

Can you believe this?
Billion dollar crimes, & the bank is "urged to improve"!
Again, again & again since 1989!

Credit Suisse Is Urged to Improve Money-Laundering Controls
Bank avoids fine in Swiss probes of FIFA, Brazil oil dealings 
Regulator criticizes failure to oversee former wealth manager 
Can you believe this? Billion dollar crimes, & the bank is "urged to improve"!!!

Yahoo/Zacks - Credit Suisse to Improve Anti-Money Laundering Processes
The Swiss Financial Market Supervisory Authority (“FINMA”) has detected shortcomings in Credit Suisse Group AG’s CS anti-money laundering compliance processes after investigating the bank in relation to certain cases in the period between 2006 and 2014.
The cases, defined as legacy cases by the bank, were in relation to suspected corruption activities involving the International Federation of Association Football FIFA, the Brazilian oil corporation Petrobras and the Venezuelan oil corporation Petróleos de Venezuela, S.A. Also, the bank was investigated in relation to a significant business relationship with a politically exposed person. In both the circumstances, FINMA concluded that Credit Suisse failed to implement proper anti-money laundering process.

There are more reports at:
WSJ - Credit Suisse Rebuked for Anti-Money-Laundering Failings 
Swiss financial watchdog orders banking giant to strengthen its processes but doesn’t impose any fines.
Credit Suisse Group AG was ordered to bolster its anti-money-laundering processes by Switzerland’s financial regulator on Monday, but avoided any financial penalties for its shortfalls.
The regulator, Finma, stopped short of imposing fines on the Swiss banking giant after uncovering shortfalls over nearly a decade through 2014 in the bank’s dealings with South American oil companies and Swiss-based FIFA, the world’s top governing body for soccer.

SeekingAlpha - Swiss regulator chastises Credit Suisse on weak anti-money laundering measures
Swiss financial industries regulator Finma concludes two enforcement procedures against Credit Suisse Group, saying it identified deficiencies in the bank's adherence to anti-money laundering measures.
The first procedure is related to suspected corruption involving soccer-governing body FIFA,  Venezuelan oil company Petroleos de Venezuela, and the Brazilian oil company Petrobras.
The second procedure relates to a significant business relationship for the bank with a politically exposed person. Besides deficiencies in Credit Suisse's anti-money laundering process, Finma also found shortcomings in the bank's control mechanisms and risk management.
No fines were imposed.

CS CEO: "Our goal is business as usual"

Credit Suisse CEO Thiam came from the Ivory Coast, one of Africa's extremely corrupt countries. He want more "business as usual" - whatever that means ...
Reuters - Credit Suisse CEO targets annual profit of 5-6 billion Swiss francs
Credit Suisse is aiming for an annual profit of 5 to 6 billion Swiss francs for the next two years as the bank puts its problems behind it, Chief Executive Tidjane Thiam told Swiss newspaper NZZ am Sonntag in an interview to be published on Sunday.
“For the future our goal is business as usual,” Thiam said in the interview. “We have worked night and day over the last three years to eliminate the problems from the past.
“For the next two years a profit of between 5 and 6 billion francs is realistic.”



Credit Suisse infiltrated government, received billions of dollars

  Uploaded - Friday, July 06, 2018

Credit Suisse infiltrated government
Received billions of dollars of business

This bank has been caught again, and again ..... doing criminal corruption.

This time,  it "infiltrated" government owned corporations in China by "hiring" relatives of their executives who gave the bank billions of dollars of business. The "hires" were often so incompetent that those associated with them observed that "corruption was a way business got done".

The practice is reminiscent of earlier scandals where the "offending person/s" lacked relevant skills and was illegitimately appointed to manage billion-dollar accounts.

Here follow some extracts from the SEC Report - which is largely a copy/paste from the DOJ Statement of Facts

What is striking is how obvious and normal it all seems for this criminal bank - a massive number of supposedly "innocent" bank officers participated in the elaborate corruption, but never said "boo" or were reprimanded, or reported the matter to a "whistle-blower line" or were prosecuted (shock, horror at even the thought). In brief:

Nothing happened to cause this extreme evil to attract significant public attention (i.e. a vote winning issue - NOT).

It followed an often repeated script (or "deep state conspiracy if you prefer) where monstrous crimes both proven and indicated were white-washed with pocket money "fake penalties" and "laughable public apologies".

The bank even wrote the "penalty offer" which the SEC accepted (page 1 of the SEC Report):

"Credit Suisse has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept ..... "

26.    asking whether Employee A could “check with [Foreign Official A] as to whether we can move things to the next step at the same time?” After stating “not too many interviews,” and explaining that Referral Hire A was “a princess [who was] not used to too many rounds of interview,” Employee A proposed “giv[ing] her the offer letter asap,” at which point Employee A would “push her mum [Official A].” In order to make Referral Hire A’s application appear more presentable, Credit Suisse HK bankers drafted a resume for her requiring them to be a bit “creative” in filling in the details.

Referral Hire A exhibited unprofessional behavior. In connection with a July 2010 training, Credit Suisse employees complained that she failed to attend a mandatory boot camp, brought her mother to training events, and left early. One Credit Suisse employee wrote that she received the worst grade in the class on an assessment, commenting that “from the looks of her assessment she didn’t even try (she filled in a pattern of 5As in a row, 5 Bs in a row, etc. on the answer key).” Less than a month later, in or around early August 2010, Referral Hire A and another intern made “the same exact error which nobody makes” on a homework assignment, and it was “apparent that they shared an Excel file and cheated on the homework.” On or about August 5, 2010, after a Credit Suisse employee reported that Referral Hire A “has been leaving at 4 pm right after every lecture every day this week while the rest of the class is working until at least 9pm, 10 pm” and that she “has yet to show up to training today,” Employee B commented, “[Referral Hire A] is the most famous intern ever.” Notwithstanding these performance issues during the probationary period, in or around early October 2010, Referral Hire A’s employment was fully approved, and both Employee A and another employee vouched for her performance.

30.    Credit Suisse managing director emailed Employee B that the managing director was “at a complete loss as to what to write for” Referral Hire A’s evaluation, asking, “[h]as anything been written on her file previously that we could copy and paste?” The two then proposed feedback for Referral Hire A: “Pls come to the office more often — we would like to see more of your smiling face,” and, “Come to the office, answer your phone, don’t be rude...” On or about June 22, 2011, a Credit Suisse employee emailed Employee B, attaching “manager summaries for everyone but [Referral Hire A],” along with the message, “I’m wondering if we can explain that she’s a special situation and there’s no need to give feedback.” Despite this, on or about June 30, 2011, Credit Suisse awarded Referral Hire A a bonus of approximately $58,000.

More extracts are copied below.

The big media reports were generally terrible giving little detail & not offending the bank - when that is what their role required.

We are not "used to it" or "tired of hearing about more bank crime" - action is needed and an independent media should be at the forefront - not cowering complicit cowards.

"Little media" was better:

Brian Monroe at the Association of Certified Financial Crime Specialists wrote a quite decent report (but who reads it?)

Closed circulation BreakingViews (bought by Reuters in 2009) had a good report by Jeffrey Goldfarb, but only a shorter version was published by Reuters. The more complete piece is available via NASDAQ.

Of the big media reports, Bloomberg was the best of a sorry bunch.

You can check for yourself if you have nothing better to do:


NY Post

New York Times

Wall St Journal

SEC Press Release

The bank's propaganda spokeswoman issued a highly dubious statement:

Credit Suisse spokeswoman Nicole Sharp said in a statement that the bank is “pleased to have reached an agreement” with the SEC and has already imposed new standards to end referral hires.“This puts this legacy matter behind the bank, and represents no material impact to Credit Suisse," Sharp said. “No criminal charges were brought, and there is no allegation that any clients, investors or counterparties were harmed by the conduct involved in the settlements.”

The Chinese people whose hard labour was squandered on mega-corruption were harmed.

The bank's competitors who lost business were harmed.

Perhaps these people don't count?

Since they are unlikely to find out the whole truth, Madame Propaganda may be close to the mark in claiming that more Credit Suisse crime being exposed: "represents no material impact to Credit Suisse" - perhaps other banks will feel justified in ever dirtier tricks and ordinary cynical people may become more susceptible to lying politicians.
 SEC’s order - Main Points

APAC - Asia-Pacific region
FCPA - Foreign Corrupt Practices Act
SOEs – (Chinese) state-owned entities
LCD or legal and compliance - Credit Suisse’s Legal and Compliance Department


Credit Suisse managers in APAC engaged in a practice of hiring, promoting and retaining government-connected Referral Hires as part of a quid pro quo by which Credit Suisse managers sought to improperly influence foreign officials to assist Credit Suisse in winning lucrative investment banking mandates.

senior Credit Suisse managers repeatedly took steps to onboard Referral Hires from SOEs and government ministries independently from the scrutiny of the company’s established, merit-based campus recruiting program.

hiring the Referral Hire would “bring [Credit Suisse] the big surprise in the near future

Need a favor from you. [The Referral Hire] will get us a US$1bn bond deal from [a prospective client].

Credit Suisse managers in the U.S. were aware of Credit Suisse HK’s hiring of client referrals, some of whom treated the job as a mere “boondoggle” (unnecessary, wasteful, fraudulent). For certain Referral Hires, Credit Suisse senior managers in the U.S. approved the hire and took him or her on in the United States. This led to complaints from Credit Suisse U.S. bankers due to the frequency of the requests and the poor quality of the Referral Hires. For example, one senior U.S. Credit Suisse banker wrote: “. . . to be honest, we have had really bad experiences with many of the individuals from Asia .

Credit Suisse failed to take adequate steps to mitigate known risks of bribery and corruption in its APAC operations.

a Credit Suisse employee explained: “Relationship hires have to translate to $” or “the relationship is worthless to our organization.” This email was forwarded to a senior Credit Suisse banking official in the U.S. In a different email, a senior Credit Suisse banker stated that a referral hire “will get us a US$1bn bond deal. . . . His family requested to change his status to permanent with CS

23.    Credit Suisse’s Referral Hires often lacked technical skills, were less qualified, and had significantly less banking and other relevant experience than candidates hired through Credit Suisse’s other employment channels.

Credit Suisse HK hired the nephew of a senior Chinese government official, despite the fact that the nephew lacked investment banking qualifications and a Credit Suisse HK manager acknowledged that “most likely he will not be good.”

this particular individual should be hired in order to “open doors on SOE fronts which we are in lack of

Credit Suisse HK employee explained: “the girl is [the] relative of someone staying at core decision making circle of [the SOE] . . . . this girl is particularly important for . . . us to be blessed by the [SOE].” After the hire the SOE awarded Credit Suisse HK multiple mandates that yielded over $12 million in net profits for the bank.

Credit Suisse HK employed an individual closely connected to a key government minister. The Referral Hire worked at Credit Suisse HK in various roles from June 2010 until December 2012. Credit Suisse HK was awarded lucrative roles in a securities offering for two Chinese SOEs as a consequence of this hire, and received net profits for its work of more than $4 million.

·the company hired the son of a senior commerce minister in China. A Credit Suisse HK senior manager strongly advocated hiring the son, stating that the company’s relationship with the government ministry was “very important” because all “red chip” deals [involving companies based in mainland China but incorporated elsewhere and listed on the Hong Kong Stock Exchange] “need to get approved there.” The bank proceeded to employ the son for over a year, and during his employment one of the senior managers used her “chit” with the minister to assist the bank in securing the necessary approval from the ministry for a deal on which Credit Suisse eventually received net profits of approximately $6 million.

26.    asking whether Employee A could “check with [Foreign Official A] as to whether we can move things to the next step at the same time?” After stating “not too many interviews,” and explaining that Referral Hire A was “a princess [who was] not used to too many rounds of interview,” Employee A proposed “giv[ing] her the offer letter asap,” at which point Employee A would “push her mum [Official A].” In order to make Referral Hire A’s application appear more presentable, Credit Suisse HK bankers drafted a resume for her requiring them to be a bit “creative” in filling in the details.

“I am seeing [Official A] to push. [Official A] will get us in the deal.” Two days later, Employee A sent another email, again using a shorthand reference to Company A in the subject line, writing, “I am meeting [Official A] . . . tomorrow. Where is [Referral Hire A’s] contract?” A Credit Suisse employee responded that the offer letter was being prepared, and a Credit Suisse HK Human Resources manager (“Employee B”) subsequently confirmed Referral Hire A would receive a first year analyst salary and a housing allowance, respectively approximately $70,000 and $30,000 annually. In or around April 2010, Credit Suisse booked the mandate for Company A, realizing a $950,000 fee.

28.    Referral Hire A began working at Credit Suisse, without being vetted or approved by LCD. During her probationary period, Referral Hire A exhibited unprofessional behavior. In connection with a July 2010 training, Credit Suisse employees complained that she failed to attend a mandatory boot camp, brought her mother to training events, and left early. One Credit Suisse employee wrote that she received the worst grade in the class on an assessment, commenting that “from the looks of her assessment she didn’t even try (she filled in a pattern of 5As in a row, 5 Bs in a row, etc. on the answer key).” Less than a month later, in or around early August 2010, Referral Hire A and another intern made “the same exact error which nobody makes” on a homework assignment, and it was “apparent that they shared an Excel file and cheated on the homework.” On or about August 5, 2010, after a Credit Suisse employee reported that Referral Hire A “has been leaving at 4 pm right after every lecture every day this week while the rest of the class is working until at least 9pm, 10 pm” and that she “has yet to show up to training today,” Employee B commented, “[Referral Hire A] is the most famous intern ever.” Notwithstanding these performance issues during the probationary period, in or around early October 2010, Referral Hire A’s employment was fully approved, and both Employee A and another employee vouched for her performance.

29.    Order book is above $900m.” Employee A responded, “[Referral Hire A] is a star” who “also will help us to get [a] USD2bn [initial public offering (“IPO”)],” adding that they should “say we will promote her to associate 1 if she delivers.” On or about April 18, 2011, shortly before Credit Suisse hosted a dinner in Paris for “[Foreign Official A] and her delegation” (including Referral Hire A), Employee A emailed a colleague that Referral Hire A was Foreign Official A’s daughter and that they “will promote her to associate soon as she will bring some sizeable IPO mandates to CS.”

30.    Credit Suisse managing director emailed Employee B that the managing director was “at a complete loss as to what to write for” Referral Hire A’s evaluation, asking, “[h]as anything been written on her file previously that we could copy and paste?” The two then proposed feedback for Referral Hire A: “Pls come to the office more often — we would like to see more of your smiling face,” and, “Come to the office, answer your phone, don’t be rude...” On or about June 22, 2011, a Credit Suisse employee emailed Employee B, attaching “manager summaries for everyone but [Referral Hire A],” along with the message, “I’m wondering if we can explain that she’s a special situation and there’s no need to give feedback.” Despite this, on or about June 30, 2011, Credit Suisse awarded Referral Hire A a bonus of approximately $58,000.

Referral Hire A’s mother accompanied her to Credit Suisse trainings in New York, traveled with her on Credit Suisse business trips, approved a list of client deals for her to work on, and requested that she be promoted by Credit Suisse. For example, in or around May 2012, Employee A and a another Credit Suisse HK senior investment banking manager (“Employee D”) had a meeting with Foreign Official A, during which Foreign Official A approved a list of Credit Suisse clients with whom Referral Hire A could work, including SOE A

Referral Hire A was promoted to the rank of Associate. Approximately one week later, Employee A reported to another banker that Foreign Official A stated that Foreign Official A would execute a “block [trade]” with Credit Suisse. Employee A added a request to “[p]ls keep this confidential for now.”

Credit Suisse employees took steps to attribute credit for certain deals to Referral Hire A, even where she did not contribute any work to those projects. For instance, on or about July 25, 2012, Employee A drafted an email that Employee A directed Referral Hire A to send back to Employee A and other Credit Suisse managers to make it appear as though Referral Hire A had worked to win a mandate from SOE A for the privatization of another Chinese energy-related SOE. After the email was sent, Employee A forwarded it to various Credit Suisse employees, giving them the false impression that Referral Hire A had herself worked to secure the deal and drafted the email. ………….  “[W]e know you made this deal possible for us.” Shortly thereafter, on or about August 6, 2012, Credit Suisse received the mandate to act as joint bookrunner with the other international investment bank on the SOE A equity block trade and convertible bond offering promised by Foreign Official A in July. This transaction generated approximately $2,680,733 in revenue for Credit Suisse.

Employee A emailed Employee C and Employee D with the message, “Btw — [Foreign Official A] mentioned about [Referral Hire A]’s promotion to VP again.” On or about August 17, 2012, Employee A emailed Employee C and Employee D, directing them to “send an email to [Referral Hire A] on [SOE A] . . . [t]hank[ing] her and her mum for the deal.” On or about August 27, 2012, Employee A inquired about when Referral Hire A could be promoted to “Associate 2,” and Employee B agreed

35.    Credit Suisse’s LCD e-mailed a series of questions relating to Referral Hire A’s employment, including “her background, level of experience and qualifications,” “[a]ny record of any external third party/ personal referee referring, recommending or endorsing her for the position,” “[w]ho in Credit Suisse interviewed her,” “[w]ho in Credit Suisse approved her hire,” and “[w]hat ... her annual performance ratings” were. Nevertheless, Referral Hire A remained at Credit Suisse until May 31, 2015. During her tenure at Credit Suisse, Referral Hire A received multiple promotions, and Credit Suisse “fast tracked” her promotions by changing her class year. In total, Credit Suisse paid Referral Hire A over $1 million in total compensation.

Credit Suisse offered employment to Referral Hire B, the daughter of an influential official with a powerful Chinese government ministry (“Official B”). Credit Suisse employees decided to recommend hiring Referral Hire B after Employee D forwarded the individual’s resume to colleagues and recommended that Credit Suisse HK “take an exceptional decision to enroll [Referral Hire B] into our first year analyst program this year.” In his recommendation Employee D emphasized that Official B was “very powerful” and “extremely influential in all the banking restructurings/IPOs.” Employee D specified a mandate sought by Credit Suisse HK and stated that Official B would be “very influential” in awarding it. Employee D made these recommendations prior to any interview or other vetting of Referral Hiring B.

Employee A authorized a Credit Suisse recruiting specialist to offer Referral Hire B an 18-month contract for a full-time paid position eligible for bonuses and a relocation allowance. Shortly thereafter, a Credit Suisse HK senior manager informed Official B about her daughter’s offer. Referral Hire B began working at Credit Suisse in March 2010, without having received any screening or approval from LCD or any other compliance body

38.    Credit Suisse staffed Referral Hire B on deals where it was believed her mother could be useful. Credit Suisse HK senior managers and other Credit Suisse employees sought to use Referral Hire B’s connections to her mother to secure business for Credit Suisse, and provided Referral Hire B with promotions and high performance ratings in connection with these efforts.

39.    shortly before Credit Suisse secured a lucrative IPO mandate from aChinese financial SOE (“SOE B”), a Credit Suisse HK senior manager e-mailed Referral Hire B to “[g]et your mum a full set of the docs which we gave to [the chairperson of the financial SOE] when she is back!” In May 2011, a Credit Suisse HK senior manager sent an e-mail to Credit Suisse employees encouraging them to “make sure [Referral Hire B] gets involved in all the meetings” related to the potential deal with SOE B due to her relationships which “will be very important to position us on the overall progress.” Subsequently, in May 2011, Credit Suisse secured the mandate from SOE B, generating approximately $8,961,177 in revenue for Credit Suisse.

40.    Credit Suisse HK senior manager sent an e-mail to various Credit Suisse employees, noting that “[Referral Hire B] was instrumental in helping us to secure [the mandate from SOE B]” and directing them to “invite [Referral Hire B] (e-mails) on all communications” as she was feeling “left out” and a Credit Suisse HK senior manager “[w]ant[ed] to keep [Referral Hire B] happy :).” Less than a month later, Referral Hire B’s performance rating was upgraded from A to AA.

Credit Suisse HK senior manager e-mailed colleagues with a subject heading including the words, “Don’t forward-Confidential” writing that the SOE promised to “give CS the JGC [joint global coordinator] and JBR [joint bookrunner] role in the IPO, based on Referral Hire B’s family’s contribution” to the SOE B.

42.    Referral Hire B routinely requested and was granted special accommodations. When she requested to take a training course in New York, she was permitted to do so, even though Credit Suisse managers believed a comparable Hong Kong course would be more appropriate. Referral Hire B performed poorly at the New York training, completing only 4 out of 16 training modules, scoring a 64% on her exam, and receiving an “Average” grade, placing her in the bottom 14% of her class. Despite this, Referral Hire B was given repeated job promotions by Credit Suisse.

43.    Notwithstanding Referral Hire B’s relationship to a foreign official, Credit Suisse employees did not disclose her background to LCD. In May 2011, over a year after Referral Hire B began her employment, a senior Credit Suisse banker inquired with whom Referral Hire B was affiliated, as the banker “[d]idn’t see that in our RH [Referral Hire] file/list.” Employee B replied that Referral Hire B’s mother was the “current #1 or 2” of the Chinese government ministry. In response, the Credit Suisse banker asked if they could “share this with LCD,” to which Employee B responded, “I would prefer not to unless there is a clear conflict” and added that he doubted Referral Hire B was qualified for the position, noting that he had “doubts about her abilities beyond getting a meeting and completing a ppt slide for a pitchbook” and that “if you have met her you might not even believe that!” He also acknowledged that it would be improper to ask Referral Hire B’s mother to take actions on the company’s behalf, noting, “[I]f we must [disclose Referral Hire B’s relationship to LCD], think it is fair to share this as long as we don’t ask her Mom to do or sign anything?” Nevertheless, Referral Hire B remained employed at Credit Suisse until 2016.

44.    In October 2007, after receiving a resume for Referral Hire C, Employee D emailedthree colleagues: “This is the candidate referred by [Official C, a high-ranking official at SOE C].” On or about November 27, 2007, Employee D emailed a senior Credit Suisse manager about Referral Hire C and another referral hire candidate, writing: “We’re seriously approached by two important clients or business partners for jobs,” noting that one of the candidates was “referred by [Official C, a high-ranking official at SOE C].” After proposing that they offer each candidate “a 3 month intern opportunity,” Employee D added, “Btw, we’re expecting two mandates (one equity and one m&a) from SOE C later this year and it’s an important account for us longer term.” On or around December 17, 2007, Credit Suisse gave Referral Hire C a three-month employment contract.

On or about March 4, 2008, multiple Credit Suisse senior managers had dinner with Official C, during which an upcoming IPO by SOE C was discussed. After dinner, Official C spoke to at least one of the Credit Suisse senior managers about permanent employment at Credit Suisse for Referral Hire C. The following day, that Credit Suisse senior manager notified a colleague that Official C would send an email about Referral Hire C to a Credit Suisse employee, and added: “We’re pitching for the [SOE C] IPO, a multi billion dollar IPO. . . .” In another email, Employee D requested support for Referral Hire C’s hire, noting “we’re pushed by [OfficialC],” and reiterating that Credit Suisse was pitching for the SOE C IPO. Less than two weeks later, or about March 17, 2008, Credit Suisse provided Referral Hire C a full-time position in Hong Kong with a salary of approximately $90,000. In May 2008, Credit Suisse received the mandate from a subsidiary of SOE C to act as bookrunner on its IPO, generating approximately $21,090,349 in revenue for Credit Suisse upon the closing of the deal in 2009. Credit Suisse was also awarded a mandate to act as financial advisor on a SOE C-related merger and acquisition in May 2008, earning approximately $225,000.

46.    During Referral Hire C’s four-year employment at Credit Suisse, senior managers repeatedly emphasized to their colleagues the importance of including Referral Hire C in all matters related to SOE C, referring to ways Referral Hire C could be “leveraged” or included on transactions for which Referral Hire C lacked relevant banking experience and expertise.47.    In or around November 2008, several senior managers decided to eliminate the positions of several highly-rated, regular analysts in order to keep client referral hires linked to banking mandates expected in the next year. Employee D wrote that with respect to Referral Hire C and two other candidates, “we’ll see real relationship revenue coming in the next 12 months if we show good will to them at this critical moment.” In or around March 2009, Credit Suisse was awarded a mandate by SOE C that brought in $1,179,906.48.    On or about May 17, 2010, Employee D emailed three senior colleagues that “[Official C was] ready for [a SOE C affiliate] to do the block [trade] next month, aiming to raise [funds] via an asset injection. . . . He will ask [the SOE C affiliate] to arrange a bidding process, similar to the [SOE C property development company] block we did before. However, given the parent will be in the deal, he won’t be too sensitive on the bid price. Let’s get ourselves prepared and keep [i]t very confidential at this stage. . . . Please make sure that [Referral Hire C] is invited to the working team.”49.    Credit Suisse HK senior managers exaggerated Referral Hire C’s contributions to the firm. On or about May 18, 2009, Employee D emailed Referral Hire C: “We just did the block [trade] for [a subsidiary of SOE C]. You’ll be nominated in the deal team pls give [Official C] a call to congratulate him and thank him for the mandate.” Referral Hire C later replied, “[A]s I know, almost all banks want to have this deal, including [three competitor banks of Credit Suisse]...But [a subsidiary of SOE C] decided to give CS si[n]ce [Official C] made lots of efforts on this.”

50.    The next day, on or about May 19, 2009, Credit Suisse acted as a bookrunner on a secondary offering for the subsidiary company associated with SOE C valued at over 500 million dollars, earning fees of approximately $6,787,128. On or about June 30, 2009, Referral Hire C received a bonus of approximately $40,000.51.    On or about June 15, 2010, a Credit Suisse banker emailed various senior banking employees to provide an update on the pending and future deals. The banker wrote that a senior official of [SOE C] “recently obtained greenlight from [Official C] regarding asset injection.” Employee D then directed an employee to “leverage [Referral Hire C] on all [SOE C] deal flows.”52.    On or about July 27, 2010, Credit Suisse learned that a SOE C affiliate had awarded mandates related to a bond deal worth several hundred million dollars to two Credit Suisse competitors. On or about July 28, 2010, Employee D referenced the deal and wrote: “It was [Referral Hire C] who made the last minute breakthrough and got us a role around 6pm last night.” This deal earned Credit Suisse $222,899. Referral Hire C’s bonus for 2010 was over $320,000.53.    Or about May 16, 2011, Employee A emailed others that two managing directors wanted to cover SOE C more proactively. Employee A noted steps a select group of Credit Suisse managers had acted to increase Referral Hire C’s compensation (without informing their colleagues), writing “we matched [Referral Hire C]’s bump-up and guarantee. [Referral Hire C’s] major contribution to the firm will be on this account. How can we push [Referral Hire C] harder to pursue this account?” Employee C then replied privately to Employee A that the other senior managers “don’t know about what we did with [Referral Hire C]. Only [Employee D], you and me plus H.R.” During Referral Hire C’s employment with Credit Suisse, Referral Hire C was paid approximately $1.5 million in total compensation. During that same period, Credit Suisse was mandated on five SOE C deals, earning over $29 million dollars.

Hiring and Advancement of Referral Hire to Secure Client Relationship with SOE

54.    During or around June 2010, Credit Suisse hired Referral Hire D as a referral hire from a large energy-related SOE (“SOE D”) in order to obtain business from SOE D. Referral Hire D’s employment was arranged by Credit Suisse during the summer of 2010, with Employee C, and Referral Hire D was to start as an Associate with a promotion to Vice President that same year.55.    Referral Hire D started work at Credit Suisse on or about November 8, 2010. Threedays later, Credit Suisse was awarded a mandate to act “as a joint bookrunner in [a SOE D affiliate]’s IPO” on or about November 11, 2010. Several weeks later, Credit Suisse booked approximately $986,439 in revenue as the deal closed.56.    In a November 16, 2010 email related to the SOE D deal, Employee A relayed that when Employee A had asked a high-ranking executive of SOE D to “push for our incentive,” the high-ranking executive “reminded [Employee A] that we need to pay [SOE D’s] relationship hire — [Referral Hire D], the Associate well at the year end bonus.” One day earlier, Employee A had told Employee B that Referral Hire D was not up for a promotion to Vice President. After the discussion with the high-ranking executive at SOE D, Employee A advocated for Referral Hire D’s promotion, which became official less than two months after Referral Hire D began working at Credit Suisse. Referral Hire D was promoted and consequently became eligible for a bonus. In an earlier email exchange between Employee B and Credit Suisse employees in London and New York concerning the promotion for Referral Hire D, a London employee noted that the promotion request was “abnormal.”

61.    Credit Suisse HK has entered into a non-prosecution agreement with the Department of Justice that acknowledges responsibility for criminal conduct relating to certain findings in the Order.

A Million Lives

  Uploaded - Thursday, November 16, 2017

Relevance of the image - the largest nuclear explosion ever filmed (1.6 megaton): it is an indication of the next Financial Crisis - vastly more powerful, destructive beyond comprehension, potentially devastating life as we have known it. (The largest nuclear explosion ever was 50 megaton).

Before the last financial crisis, FRCS warned the world that organized crime in banks would bring financial calamity - it did exactly that!

FRCS warned that honest banks could not compete against criminal banks - hundreds went bankrupt because they refused to engage in crime.

We are now warning that organized crime in banks has become worse.

Even old traditional banks like Australian Commonwealth Bank and Danish Danske and Nordea Banks have entered into the criminal bank zone.

Bank crime is like a contagious disease which is spreading rampantly - because of the easy "criminal profits" and corruption they bring.

Unless action is taken NOW, the next financial crisis will be worse.

The people in power refused to listen to us the last time, and they are not listening now.

Our answer is to warn honest people:

A Million Lives: the Movie

Dedicated to the million people who died because of organized crime in the financial system - stupidly called "the financial crisis".

Donate here to support our work warning honest people.

The death toll from both Hiroshima and Nagasaki atomic bombs was around 250,000 - less than a quarter of those who died because of the Great Organized Crime Recession. It was misnamed the Global Financial Crisis - as if "no-one was to blame." 

The causes - organized crime - were never addressed - have now escalated, making it likely to repeat itself in a more severe form.

The above image shows the explosion of a megaton hydrogen bomb - around 40 times more powerful than the combined power of the two bombs dropped on those Japanese cities.

The image is an indication of the next Financial Crisis - vastly more powerful, destructive beyond comprehension, potentially devastating life as we have known it.

The Difference

The threat of nuclear war was tangible and inescapable, but the coming financial war is approaching invisibly.

Powerful and wealthy people would suffer with the rest of us in a nuclear war. 

Russian and US politicians were horrified that they could so easily destroy the world - and they stopped their madness.

Not so in a financial war.

For years, powerful and wealthy people have prepared for the next financial calamity by hiding trillions of dollars into secrecy jurisdictions and tax havens.

They will be on the beaches of Bermuda while good people die by the thousands.

The rest of us have been stuck with paying off debts from bailing out criminal banks and paying for the immense damage they did. 

There is nothing effective which is containing crime in the financial system.

The last Financial Crisis was caused by organized crime in banks - and the  next one will be too.

But it will be worse - unless action is taken now:

None of the chief perpetrators were jailed and most kept obscene bonuses.

Profitable crime will only grow until stopped.

Donate here to support our work.

A hundred years from now, historians and economists will curse this generation for being "stupid beyond belief" for putting everyone at risk by allowing criminal banks with "no conscience or remorse" to roam free, as top predators, able to buy influence - to fund terrorists, murderers, drug dealers and nuclear bombs - to control politicians, pension funds and vast swathes of economic activity - and to crucify loyal employees as "sacrificial rogues" in order to conceal and continue evil activities. On that, at least, we can all agree.

The Business Assessment

David M. Einhorn is an American hedge fund manager, and philanthropist. He is president of Greenlight Capital. It has generated 16.5% annualized return for investors from 1996 to 2016. As of 2017, Greenlight Capital has US$9.27 billion in assets under management. He bet against Lehman Brothers before it collapsed and won.
Einhorn was ranked 44th in the Time 100 most influential list of people in the world in 2013. According to Forbes Magazine, Einhorn has a net worth of US$1.54 billion, making him the 44th youngest billionaire on the Forbes 400. These are quotes from his Oxford Union address this week:

The world has not learned from the financial crisis
We are still hanging on to the criminals of the financial crisis
If you took all of the obvious problems from the financial crisis, we kind of solved none of them
We sweep as much under the rug as we can and move on as quickly as we can
Issues That Caused the Crisis Are Not Solved

The Political Assessment

Gordon Brown was Prime Minister of the United Kingdom from 2007 to 2010. Brown was a Member of Parliament from 1983 to 2015. He is now the United Nations special envoy for global education. These are extracts from his new book entitled My Life, Our Times:

Banks have not learnt lessons of 2008 crisis
bankers (are) still ‘rewarded for failure’
Little has changed since the promise in 2009 that we bring finance to heel
The banks that were deemed ‘too big to fail’ are now even bigger.
bankers were still being “rewarded for failure”. He said that instead of being thrown in jail for dishonest conduct, bankers were paid too much and could fall back on state support if things went wrong. Mr Brown added that in the next crisis regulators “would still not know what is owed and by whom and to whom” because of the way assets have shifted out of banks into the more lightly regulated “shadow banking” system. He said that “2009 has proved to be the turning point at which history has failed to turn”. If bankers’ conduct was dishonest by the ordinary standards of what is reasonable and honest, should there not have been prosecutions in the UK as we have seen in Ireland, Iceland, Spain and Portugal? “Dividends and bankers’ pay today represent almost exactly the same share of banks’ revenues as before the crisis hit,”
a “more relevant” tool to crack down on bankers who carry out fraud, fail to disclose information or abuse their position would be the 2006 fraud act
Barclays’ strategy during the crisis was “unconscionable”,
Fred Goodwin, the disgraced former chief executive of RBS, who was stripped of his knighthood after being fired in the wake of a £45bn bailout of RBS by the government in 2009. By the time the bank collapsed he had from his company a private suite in the Savoy costing £700,000 a year, a fleet of 12 chauffeur-driven Mercedes limousines with RBS emblazoned all over them, and he regularly used a private jet at the weekend — whether for boar hunting in Spain or following the glamorous F1 circuit around the world.” He recalled how Mr Goodwin was the only banker to oppose a plan to fund community causes using as much as £1bn of “orphan assets” left in banks by customers who disappeared or died without leaving any instruction for their money.

The Expert Assessment

Professor Larry Randall Wray is professor of Economics at the University of Missouri–Kansas City, Senior Scholar at the Levy Economics Institute of Bard College and Research Director of the Center for Full Employment and Price Stability. These are extracts from his research paper "Lessons We Should Have Learned from the Global Financial Crisis but Didn’t" written for the Levy Economics Institute:

... the worst part is the cover-up of the crimes. …. we cannot resolve the crisis until we begin going after the fraud.

Unregulated and unsupervised financial institutions naturally evolve into control frauds.

… so far, none of the big Wall Street crooks have been prosecuted for high crimes. There have been some fines and civil cases, and a few lesser criminals like Bernie Madoff were sacrificed, but all the big banksters are not only free—they are still running their criminal organizations (called “chartered banks” in polite conversation), advising the White House, and gearing up to fund the next presidential campaign. Nothing can be done until the next Wall Street–induced crash.

It was massive insolvency across at least the largest financial institutions (both banks and shadow banks) that led to the “run on liquidity” (really, a refusal to refinance one’s fellow crooks—criminal enterprise always relies on trust, and when that breaks down, war breaks out.)

…. all backed by nothing other than a fog of deceit. All it took was for one gambling banker to call the bluff. Every banker looked for an even bigger sucker to refinance the junk. The only saps left standing sat (so to speak) in Washington. And that is why it took tens of trillions of lending, spending, and guaranteeing of trash by Uncle Sam acting as sucker of last resort to stop the carnage. (As every gambler knows, if you do not know who the sucker is within five minutes of beginning the game, you are the sucker.)

The hired gun in charge of a financial institution can strip the bank of far more money than the owners or bank robbers will ever get.

But policy makers still do not want to recognize that there is fraud everywhere. We know that the banks committed lender fraud on an unprecedented scale (the best estimate is that 80% of all mortgage fraud was committed by lenders); we know they continue to commit foreclosure fraud (and that their creation, MERS—Mortgage Electronic Registry System—has irretrievably damaged the nation’s property records; this will take a decade to sort out); and we know they duped investors into buying toxic waste securities (using bait and switch— substituting the worst mortgages into the pools) and then bet against them using credit default swaps. Every time an investigator finally musters the courage to go after one of these banks, fraud is uncovered and a settlement is recovered.

It is apparent that fraud became normal business practice. I have compared the home finance food chain to Shrek’s onion: every layer was not only complex, but also fraudulent, from the real estate agents to the appraisers and mortgage brokers who overpriced the property and induced borrowers into terms they could not afford, to the investment banks and their subsidiary trusts that securitized the mortgages, to the credit ratings agencies and accounting firms that validated values and practices, to the servicers and judges who allow banks to steal homes, and on to CEOs and lawyers who signed off on the fraud. To say that this is the biggest scandal in human history is an understatement. And the fraudsters are still running the institutions.

The lender banks created Orwellian-named “affordability products” that insiders called neutron bomb mortgages (designed to blow up and kill the borrower, but leave the home standing) and told the brokers to make those and to refuse the usual documents required for loans—such as W-2 forms and bank account information. Why? As Ollie North put it, “plausible deniability.” Banks could claim “Hey, we didn’t know this unemployed guy couldn’t afford a half million dollar home in Brookside Acres with an exploding adjustable rate mortgage loan at 120% of home value! That borrower defrauded us (add whimpers for effect)!”

... lending was so much easier and cheaper to do if you did not bother to check the financial capacity of the borrower. Hence, we ended up with Liar’s Loans and NINJA Loans (no income, no job, no assets, no problem!).

Once a bank has made a Liar’s Loan, every other link in the home finance chain must be tainted. And that means every transaction, every certification, every rating, and every signature all the way up to the CEO of the investment bank is part of the cover-up.

… the biggest banks have been paying a series of fines imposed for fraudulent behavior.

The only questions remaining for everyone operating in that chain were these: How can I make a buck? How can I get out of this Ponzi scheme before it collapses? And how can I stay out of jail? As we know, they made the bucks as they were rewarded with multi-million dollar bonuses. While most did not exit before the collapse, Uncle Sam covered their losses with trillions of dollars of bailout. And now they are waiting for the statute of limitations on their probable crimes to run out while the nation’s top cops look the other way.

Another path to crisis could be that banking supervisors discover that a major bank is massively insolvent. There is no question that banks have been cooking their books—largely to justify reduction of loan loss reserves in order to record profits so that bonuses can be paid. The problems could begin at Bank of America, or CitiBank, both of which are saddled with bad mortgage debt that they have not written down sufficiently. Many analysts think they are insolvent, so all that is needed to trigger a crisis is for some information to get out, leading to downgraded credit ratings and generating another huge liquidity crisis. Fortunately or unfortunately, Congress is probably not going to let the Fed do what it did last time. Indeed, after Dodd-Frank, most of the actions taken by the Fed and Treasury in the 2007–08 crisis are now illegal or require approval of the President and/or the Congress. It is not likely that such approval could be obtained quickly enough to avert a run.

There is another avenue for contagion. Many people think that European banks are more fragile than American banks, so the problem could start in Europe then spill over to the United States. There is a very easy path from US money market mutual fund holdings of Eurobank assets to a global financial crisis. That is $3 trillion of extremely short-term liabilities that are like deposits, but not insured. Last time, the US government extended the guarantee to all of them; Dodd-Frank outlaws such intervention.

So appearance of a problem among Eurobanks could bring down that whole market—about twice the size of the US subprime mortgages that brought on the global financial crisis last time.

Unfortunately, we haven’t learned any of these lessons. We’ve done no reforming. We let the Ponzi schemes continue, run by the same crooks.

…. economies of scale in banking are reached at a very small size. Supposed economies of scope have proven to be mostly the ability to dupe customers with “bait and switch” schemes. Charles Keating’s Lincoln Savings used its FDIC seal of approval to sell risky and ultimately worthless assets to its elderly widows who thought they were buying insured certificates of deposit (CDs). More recently, Goldman Sachs allowed hedge fund manager Paulson to design sure-to-fail synthetic collateralized debt obligations (CDOs) that Goldman sold to its own customers, allowing both Goldman and Paulson to use credit default swaps (CDSs) to bet on failure (Eisinger and Bernstein, 2010). In other words, the “synergy” allows the institution to bet against its customers. Worse, large institutions invariably become too complex to manage, regulate, or supervise. This allows top management to run the institution as a control fraud, duping owners of equity while top management is enriched. And, finally, since the institution is thought to be “too big to fail,” government will also get swindled when it is called in for the inevitable bailout.

Criminal Banks Funded Nuclear Bombs

  Uploaded - Thursday, August 17, 2017

Picture Credit (LIFE Picture Collection): The lion is real and alive. Noel Marshall (husband of Tippi Hedren) is working in his study while Neil the "pet" lion hovers. Neil (the lion) had the "run of the house" while Noel, Tippi and her daughter Melanie Griffith were shooting the movie "Roar". It was the most dangerous movie ever made.

No animals were harmed in the movie, but around 70 humans were, with the real blood and screams recorded in the movie. Watch a 2 minute segment here

Assistant Director Doron Kauper had his throat bitten open (an inch from the jugular), his jaw was bitten, and one of the lions attempted to rip an ear off. He was also injured in the head, chest, and thigh. Melanie Griffith’s face-mauling scene in the movie was real.

Tippi Hedren has since acknowledged that it was "stupid beyond belief" to put her family at risk by allowing an animal with "no conscience or remorse genes" to roam free. On that, at least, we can all agree.

Why this photo? A hundred years from now, historians and economists will curse this generation for being "stupid beyond belief" for putting everyone at risk by allowing criminal banks with "no conscience or remorse" to roam free, as top predators, able to buy influence - to fund terrorists, murderers, drug dealers and nuclear bombs - to control politicians, pension funds and vast swathes of economic activity - and to crucify loyal employees as "sacrificial rogues" in order to conceal and continue evil activities. On that, at least, we can all agree.

Lions are far safer than criminal banks because they limit their appetite to what they need, they behave according to their nature, and so they can not be regarded as inherently evil.

Not so criminal banks who have financed nuclear weapons for rogue states for profits they didn't need - to satisfy grotesque greeds, secret agendas and who knows what else?

Criminal Banks Finance Nuclear Bombs

North Korea and Iran obtained their nuclear bomb technology from Pakistan. Both Pakistan's nuclear program and the criminal sale of that technology was financed and arranged by a criminal bank - BCCI (Bank of Credit & Commerce International). 

BCCI was able to do that and more because it was a "politically connected and protected bank". It bribed corrupt politicians in the US and elsewhere. It was used by the CIA and other US agencies for covert operations, arms shipments and financing.

The US DOJ protected BCCI and obstructed other agencies from investigating it. Robert Morgenthau, the Manhattan (New York) district attorney, launched investigations into BCCI and complained: "We have had no cooperation from the Justice Department since we first asked for records ..... In fact they are impeding our investigation, and Justice Department representatives are asking witnesses not to cooperate with us."

BCCI was found it to be involved in money laundering, bribery, support of terrorism, arms trafficking, the sale of nuclear technologies, the commission and facilitation of tax evasion, smuggling, illegal immigration, and the illicit purchases of banks and real estate.

Criminal Banks & Nuclear Bombs - Stupid beyond belief

More recently, Credit Suisse was prosecuted for a jaw-dropping management protected criminal scheme to finance Iran's program for developing nuclear missiles and weapons. It used two of its biggest pension management subsidiaries in a sophisticated scheme of criminal money laundering.

Credit Suisse Similar to BCCI

The parallels between these two criminal banks are astonishing. The enormity of the crimes perpetrated by BCCI only became public because it was raided, closed down and audited. A fair comparison would be to compare the status of the two criminal banks at their equivalent historical positions. Before BCCI was shut down, it was politically connected and protected by the DOJ. Investigations into it were obstructed and starved of resources to the point that they were completely ineffective.

The DOJ's main probe of BCCI was handled by a sole Assistant U.S. Attorney in Tampa, who was then assigned another major case. Similar understaffing was evident in a Miami grand jury probe of the relationship between BCCI and the CenTrust savings and loan, whose failure is estimated to have cost taxpayers $2 billion. Vital documents disappeared while under US control. This accounts for the fact that a 16-month investigation yielded no indictments, despite the bank's gargantuan criminal network.

Likewise, the DOJ paid empty lip-service to investigating CS's crimes but only published a joke of a summary, while rejecting massive evidence of monstrous crimes.

The DOJ jailed the whistle-blower reporting the bank's tax evasion frauds. It also jailed the lawyer representing pensioner victims of the Enron fraud wanting the bank to pay compensation for its part in setting the crime up.

As for the bank - the DOJ gave it a "free pass" for crimes which would nearly lock away an ordinary person "forever".

Ordinary taxpayers who paid the salaries of the DOJ staff were abandoned when defrauded of billions - and received next to nothing.

North Korean Nuclear Know-how - Bought by Corruption

North Korea bribed Pakistani officials to obtain its nuclear technology, according to a letter obtained by the Washington Post. Pakistan developed its nuclear technology as a defense to India's nuclear capability and it was sold onto Iran, Libya and North Korea. Of the three, only Libya negotiated a voluntary agreement to relinquish nuclear weapons. Its government was overthrown, and North Korea emphasises that is the reason it will never give up its nuclear "deterrent".

The greatest fear has been that wealthy terrorist organizations like ISIS and its successors (there will be more) shall follow the same route as North Korea, e.g. that:

Terrorists will bribe Pakistani officials to obtain nuclear bomb materials.

Pakistan President Musharraf even permitted the disgraced founder of Pakistan's nuclear-weapons program - Abdul Qadeer Khan - to keep the vast wealth he accumulated selling atom bomb-making technology to rogue states - Libya, Iran and North Korea. He simply said he was grateful for the bomb that Khan supplied, which India already possessed without huge opposition from those now complaining about North Korea.

Criminal Bank Freedom: Stupid beyond belief

Sophisticated concealment obstructs transparency into the modern criminal bank's operations. The following series of photos is an analogy to the current "stupidity" in allowing them to roam free and devour innocent prey, except that the lions are far less dangerous and shouldn't be regarded as evil.

Does this remind you of politicians playing games for political donations?

Bank Brushes Off $Billion Laundering

  Uploaded - Monday, August 07, 2017

Cartoon credit: Jon Kudelka
This cartoon  refers to the so-called Australian "Inquiry" into the banks (it was a bad joke - don't laugh) which had done some really bad things. However, only politicians were allowed to ask questions for a maximum of 15 minutes each. As usual, victims and whistle-blowers were prohibited. Quite serious people said it was a farce designed to protect the banks. Others disagreed. Surprise: most Australians believe there needs to be a thorough inquiry called a Royal Commission into the banks. Buy John's prints and calendars here. You will like them.

The consequences: around a year ago, the business-friendly Australian government decided NOT to have a real inquiry into the problem.

Since profitable crime always grows until prosecuted - well, of course it did. 

This week it was up to around a billion dollars of money-laundering, potentially for drug syndicates, terrorists and a wide range of other criminals.

When banks commit gigantic crimes, otherwise normally serious people lose their sense of proportion and pretend it is no big deal.

Sadly, this case appears to be following that pattern. As for the victims of the crime - not a word of apology or hint of compensation. 

Everyone seems to pretend that money-laundering is a victim-less crime, a bit like crimes against poor people, youth, minorities or someone whose religion you don't like, or just about any powerless group.

AU Bank Brushes Off $Billion Laundering

Only the Symptom Exposed - not the Cause
The known symptom of the problem was the zero risk assessment for huge cash deposits through new intelligent deposit machines (IDMs). An IDM is just a new type of ATM (ATM = automatic teller machines which are everywhere now). Around $9 billion of cash was deposited before someone started to wonder why their use was so popular for big untraceable cash deposits which were rapidly sent offshore to effectively untraceable secrecy jurisdictions.

Add to that, Australia is a 'place of choice' for money laundering due to lack of regulation, according to one of the biggest banks (ANZ).

AU Government Warned 3 Years Ago that this Would Happen

Around 3 years ago, the Australian government held a public enquiry into financial related crime. That means that it promised to accept submissions from the public - like me. So I spent a few hundred hours in doing my patriotic duty to share my knowledge - as probably the only expert in a specific type of financial crime in the whole country. 

As an expert, I accurately described what had been going on (a lot of money laundering) and what was certain to happen in the future (a lot more money laundering) unless certain steps were taken (which they weren't).

The main point was that severely criminal banks were operating in Australia - and this would force otherwise honest banks to either follow suit or minimally engage in extremely undesirable behaviours.

To me, this was obvious and irrefutable. Unfortunately, it seems that the logic of the key people was blocked when they "smelled" loss of political capital (donations, popularity, prestige, favours or who knows what, but surely we need a real inquiry to find out). 

Quotes from our submission 3 years ago:

Urgent Action Required to Protect Australia from Crime in Financial Institutions

This submission refers to a matter of ultimate seriousness – alleging high level corruption in government and criminal authorities which protected the operation of organized crime in Australia and the world’s financial system.

The Urgency of the Situation

Action is urgently required to protect honest banks from unfair competition from criminally subsidized banks which utterly distorts the risk/reward profile of the financial industry. Criminal penetration on such a scale obscures the boundary between criminal and legitimate corporations – and pressures otherwise honest banks to venture into high risk, illegitimate, reckless, illegal or even criminal activity, destabilizing the financial system and dragging it down into disrepute.

A New Normal

The new normal is that law abiding banks must now officially and openly co-exist with criminal banks. For years we have been warning Australian and international criminal, regulatory and government authorities that urgent action was needed or else there would be:

no clear demarcation between criminal and non-criminal corporations

This has now happened, but many law makers, regulators and judicial authorities are in denial about it, which is extremely dangerous.

Characteristics of this dangerous new bank typology

In order to define the typology and absolutely confirm its existence, this submission will focus on the criminal activity in the bank ............

Everyone Expressed a Big Surprise!!

The national news network (ABC) even published one report headed:
Even the Commonwealth Bank's staunchest critics wouldn't have predicted this one.

Well, we predicted it was a certainty - years ago, and worse might yet happen unless genuine action takes place. You can't suck money out of the legitimate economies at the current rate - and squirrel it away in secrecy jurisdictions, and fantasize that more debt will satisfy.

Will senior management at last be held to account?

Senior management says it was just a tiny error in computer code - with no cross-checks, balance sheets programmed for detecting suspicious transactions, or beneficial owners of assets, OR EVEN CASH DEPOSITS OF OVER $10,000 ...... 

So, senior management says they are not budging, not giving back bonuses, and they are certainly NOT going to make any (known) effort to identify victims or (horror) offer compensation (without torture by lawyers). Latest update is that the board will cut the execs' pay a little, but not by much & not close to being commensurate to the damage done.

This is exactly how modern criminal organizations work

No-one seems to realize that this is exactly how modern criminal organizations work.

If crime bosses can make fifty million by corrupting computer code, that is perfect for them. Their excuse script is already written - see above. Does that mean that this particular bank exec is necessarily a criminal? No - that is an entirely irrelevant question. Criminal organizations infiltrate banks, government and politics. It may not be easy to quickly identify the criminal source, certainly not from a few media reports. The point is exactly as we warned YEARS AGO:

A New Normal

The new normal is that law abiding banks must now officially and openly co-exist with criminal banks. For years we have been warning Australian and international criminal, regulatory and government authorities that urgent action was needed or else there would be:

no clear demarcation between criminal and non-criminal corporations

This has now happened, but many law makers, regulators and judicial authorities are in denial about it, which is extremely dangerous.

This was a massive crime with horribly trashed victims

Just to ensure that you know that this was a massive crime with likely horribly trashed victims, as yet unidentified, here is the concise statement of the prosecution filing for these crimes:

ACN 123 123 124
1.    In May 2012, the Respondent (CommBank) rolled out Intelligent Deposit Machines (IDMs), a type of ATM that accepts deposits by both cash and cheque. Deposits through an IDM are automatically counted and are credited instantly to the nominated recipient account. The funds are then available for immediate transfer to other accounts both domestically and internationally.
2.    IDMs can accept up to 200 notes per deposit, that is, up to $20,000 per cash transaction. CommBank does not limit the number of IDM transactions a customer can make a day.
3.    IDMs facilitate anonymous cash deposits. In order to make a deposit through an IDM, a card must be entered to activate the machine. The card can be from any financial institution, however, deposits can only be made into CommBank accounts. If the card entered into the machine was not issued by CommBank, the cardholder details are not known to CommBank. Nor are banks obliged to collect or report depositor details for threshold transaction reports (TTRs) for deposits made through an IDM.
4.    There has been significant growth in the use of CommBank IDMs since their roll out. In the 6 months from June 2012 to November 2012 about $89.1 million in cash was deposited through this channel. In the 6 months from January 2016 to June 2016 cash deposits through this channel grew to about $5.81 billion. In May and June 2016 over $1 billion in cash was deposited each month through CommBank IDMs.
Failure to comply with its AML/CTF Program
5.    CommBank has a Joint Anti-Money Laundering and Counter-Terrorism Financing Program, which is divided into Part A and Part B, as required by s 81 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act). Section 2 of CommBank's Part A program contains procedures for managing the risks reasonably faced that the provision of designated services may facilitate money Iaundering or financing of terrorism (MUTE risk) which were included to comply with Part 9.1 cf the Anti-Money Laundering and Counter-Terrorism Financing Rules instrument 2007 (No. 1) (the Rules). ComrnBank has not complied with a number of these procedures on and from May 2012.
6.    Prior to rolling out 1DMs, CommBank did not carry out an ML/TF risk assessment. CommBank did not carry out an ML/TF risk assessment in response to the exponential rise in cash deposits through IDMs, nor in response to alerts raised by internal transaction monitoring systems, nor did it review its ML/TF risk assessment in response to identification by law enforcement of significant instances of money laundering through IDMS. CommBank did not take any steps to assess the ML/TF risks posed by IDMs until mid-2015, 3 years after they were introduced. About $8.91 billion in cash was deposited through CommBank IDMs before it conducted any assessment of the ML/TF risks associated with the IDM channel.
7.    CommBank has not introduced appropriate risk-based systems and controls to mitigate and manage the higher ML/TF risks it reasonably faces by providing designated services through IDMs, contrary to Section 2 of the Part A program.
8.    CommBank's Part A program includes a transaction monitoring program that was included to comply with Rules 15.4, 15.5, 15.6 and 15.7. At various times between about 20 October 2012 to 27 September 2016 CommBank did not comply with the requirements of its transaction monitoring program with respect to 778,370 accounts. None of these accounts were subject to transaction monitoring at the "account level", at various times, and some were not subject to "customer level" transaction monitoring.
Late TTRs
9.    CommBank is required to report to AUSTRAC any "threshold transaction" (being a transaction involving the transfer of physical currency in the amount of $10,000 or more) within '10 business days after the transaction occurs.
10.    CommBank failed to give 53,508 TTRs to AUSTRAC on time for cash transactions of $10,000 or more that were processed through IDMS from 5 November 2012 to 1 September 2015 (the Late TTRs). The Late TTRs represent about 95% of threshold transactions that occurred through IDMs in that period and have a total value of $624.7 million. 1,640 of the Late TTRs (totalling about $17.3 million) related to transactions connected with money laundering syndicates being investigated and prosecuted by the Australian Federal Police (AFP) or accounts connected with those investigations. A further 6 of the Late TTRs related to 5 customers who had been assessed by CommBank as posing a potential risk of terrorism or terrorism financing. Two of the Late TTRs were lodged with AUSTRAG on 24 August 2015 and the remaining 53,504 were lodged with AUSTRAG on 24 September 2015.
Failure to file SMRs and to carry out ongoing due diligence
11.    Suspected money laundering was conducted through CommBank accounts, by way of cash deposits, many through IDMs, followed immediately by international and domestic transfers. Many of the cash deposits were 'structured' by customers: that is, deposited in amounts just under the threshold transaction limit to avoid triggering CommBank's obligation to give a TTR to AUSTRAL Structuring is an offence under s 142 of the Act.
12.    Despite Identifying the pattern of activity on these accounts as suspicious and indicative of money laundering, CommBank repeatedly failed to comply with its obligations to give a suspicious matter report (SMR) to AUSTRAC either at all or within the time required by s 41 of the Act. In part, this was because CommBank adopted a policy not to submit SMRs if the same type of suspicious behaviour had been reported any time within 3 months prior. In other cases, SMRs were not reported because no transaction monitoring alert had been raised, alerts had not been reviewed, or, where alerts had been raised and reviewed, CommBank only partially reported its suspicions. CommBank also failed to lodge SMRs because notifications by law enforcement of unlawful activity were ignored,
13, Section 36 of the Act requires CommBank to monitor its customers with a view to identifying, mitigating and managing ML/TF risk. CommBank failed to do this, including because in some instances, no transaction monitoring alerts were raised for suspicious activity, and, when alerts were raised, they were not reviewed in a timely manner having regard to ML/TF risk (in many instances, alerts were not reviewed for months after they were raised). In many cases, the accounts the subject of money laundering were not being monitored at all.
14, Even after suspected money laundering or structuring on CommBank accounts had been brought to CommBank's attention (by law enforcement or through internal analysis), CommBank did not monitor its customers with a view to mitigating and managing ML/TF risk, including the ongoing ML/TF risks of doing business with these customers. Rather, once suspected money laundering or structuring had been identified on these accounts, CommBank often looked no further than whether or not to submit an SMR. The Rules require mandatory enhanced customer due diligence (ECDD) where a s 41 suspicion is formed. CommBank did not carry out any ECDD on these accounts (such as identifying the source of the customer's wealth or terminating accounts) either at all or until after several SMRs had been raised. When CommBank terminated accounts, customers were generally given 30 days' notice. Suspicious transactions were allowed to, and did, continue during the notice period on some of these accounts.
Money laundering Syndicate No 1
15.    From late 2014 to August 2015, approximately $20.59 million was deposited, mostly in structured cash deposits, through CommBank IDMs into 30 CommBank accounts, 29 of which were in fake names. Shortly after each deposit, the money was transferred internationally. Approximately $20.56 million was transferred offshore, Two individuals have been convicted of dealing with proceeds of crime and structuring offences in relation to this activity.
16.    By April 2015, CommBank had identified repeated, suspicious and connected patterns of structured cash deposits followed by international money transfers on 16 of these accounts (15 of which were in fake names). Notwithstanding this suspicion, between April and 1 July 2015, CommBank permitted approximately $9.1 million to be transferred from these`accounts to Hong Kong.
17.    The AFP requested CommBank prevent withdrawals and transfers on these accounts on 1 July 2015. By that time, CommBank had identified a particular methodology for these accounts - they were opened by certain foreign nationals on holiday visas and deposits through IDMs were made Involving blatant structuring, followed by transfers offshore almost immediately thereafter.
18.    Between 1 July 2015 and 24 August 2015, the same syndicate laundered approximately $4.78 million using 11 further accounts opened in fake names. Those accounts used the same methodology previously identified by CommBank and yet were not appropriately monitored having regard to the ML/TF risks and were not always the subject of SMRs that complied with s 41.
19.    60 of the Late TTRs recorded transactions of this syndicate, with a value of $629,200. On 92 occasions CommBank failed to report suspicions relating to this syndicate, either at all or on time as required by s 41, involving transactions totalling approximately $22.7 million.
Money laundering Syndicate No 2
20.    Between June 2014 and January 2015, 3 individuals deposited $2,272,435 in cash into 3 respective CommBank accounts (largely through lDMs), Almost immediately after each deposit, the money was transferred domestically, including to money remitters. By July 2014, CommBank was aware of unusual patterns of transactions on 1 of these accounts and had identified a number of deposits which were structured. By October 2014, CommBank was aware of suspicious transactions on the second of these accounts, and by November 2014, CommBank was aware of suspicious transactions on the third account. However, CommBank continued to allow these Individuals to transact on these accounts until they were each arrested on 19 January 2015. These 3 individuals have been charged with dealing in proceeds of crime, in connection with a drug importation syndicate, with 1 of these individuals already having been convicted.
21.    Between March 2014 and November 2015, a further $4.053 million was deposited, in cash, into 9 other CommBank accounts, followed by domestic transfers to accounts which had previously received funds from the three individuals. Even after CommBank identified structuring on the deposits, and identified some of these accounts as belonging to suspicious money remitters or being part of a sophisticated money laundering syndicate, CommBank allowed transactions to continue.
22.    178 of the Late TTRs recorded transactions involving this syndicate or related third party accounts, with a value of $1,780,030. On 18 occasions CommBank failed to report suspicions relating to this syndicate or related third party accounts, either at all or on time as required by s 41, involving transactions totalling approximately $5.73 million.
Money laundering Syndicate No 3
23.    From November 2014 to August 2015, cash deposits totalling $27.2 million were made to one CommBank account. Almost immediately after each deposit, the money was transferred internationally. $26.47 million was transferred to offshore accounts. The deposits were the proceeds of a drug manufacture and importation syndicate. Three individuals have been charged with dealing in proceeds of crime, with 1 of these individuals already having been convicted.
24.    Despite cash deposits under $10,000 being made into this account, no transaction monitoring alerts for structuring were ever raised. Very large cash deposits, up to $532,500, were also regularly being made at branches. Some alerts were raised for these large deposits, but were not reviewed in a timely manner, having regard to the MLITF risks. By no later than 28 April 2015, CommBank considered the account to be high risk and suspicious. By this time, $14.7 million had already been sent offshore. However, CommBank did not monitor this customer having regard to the MLITF risks and permitted the highly suspicious activity to continue, with $12.2 million in cash deposits received and $11.8 million remitted overseas after 28 April 2015. Although the pattern of structured deposits, large cash deposits and international transfers occurred almost daily, an SMR was only lodged around every 3 months or so for this account.
25.    514 of the Late TTRs recorded transactions into this CommBank account or into the account of related persons, with a value of $5,435,860. On 3 occasions CommBank failed to report suspicions relating to this syndicate, either at all or on time as required by s 41, involving transactions totalling approximately $10.1 million,
Money laundering Syndicate No 4
26.    Between February 2015 and May 2016, over $21 million was deposited in cash into 11 CommBank accounts. These deposits were the illicit proceeds of a drug importation and distribution syndicate. More than half of the deposits occurred through IDMs. Shortly after each deposit, the money was transferred to other domestic accounts. Transfers were made across a number of these accounts to the same recipients, some of which were known as early as May 2015 to CommBank to be suspicious entities, including accounts connected to Syndicate No 2.
27.    A number of transactions on these accounts were not the subject of any transaction monitoring alerts, in spite of large and structured cash deposits being made. However, by mid-2015, CommBank was aware of unusual patterns of transactions and suspected structuring of cash deposits on 4 of the accounts. CommBank became aware of unusual and suspicious transactions on the remaining accounts later in 2015. CommBank also identified a connection between suspicious activity on a number of these accounts. Despite these matters, CommBank did not monitor these customers having regard to the ML/TF risks, and permitted transactions to continue on these accounts.
28.    The AFP advised CommBank in late 2015 that a number of these accounts were connected with an investigation into serious criminal offences including 'drug importation and unlawful processing of money'. CommBank permitted several of the accounts to remain open even after this time and further transactions occurred. Eight individuals have been charged with dealing in proceeds of crime, with 6 of these individuals already having been convicted.
29.    888 of the Late TTRs record transactions on these accounts and a related party's account, with a value of $9,462,095. On 27 occasions CommBank failed to report suspicions relating to this syndicate, either at all or on time as required by s 41, involving transactions totalling approximately $34.3 million.
Cuckoo smurfing syndicate — Strike Force A
30.    CommBank accounts were used for "cuckoo smurfing", a form of money laundering which involves transfers of money between associates within separate countries in such a way that obviates the need for money to cross international borders.
31, In May 2015, 2 individuals were arrested and charged with money laundering and structuring offences, which were allegedly committed by structured cash deposits made into a number of CommBank accounts, as part of a "cuckoo smurfing" syndicate. NSW Police alleged that some $1.784 million was laundered through 99 CommBank accounts between 7 October 2014 and 21 May 2015 (Strike Force Al). NSW Police first advised CommBank that it was investigating money laundering and structuring on these accounts on 26 May 2015.
32. Between 24 October 2011 and 18 June 2016, 902 cash deposits under $10,000, totalling $7.2 million, were deposited into 12 CommBank accounts —10 of these accounts being Strike Force Al accounts and a further two accounts related to Strike Force Al accounts. On 20 occasions, CommBank failed to report $2,311,902 in cash deposits to 11 of these 12 accounts that it suspected were structured, contrary to s 41. CommBank failed to monitor these customers with a view to identifying, mitigating and managing ML/TF risk.
33. In January 2015, another individual was arrested and charged with money laundering and structuring offences, which were allegedly committed by structured cash deposits made into a number of CommBank accounts, as part of a cuckoo smurfing syndicate. NSW Police alleged that some $273,432 was laundered through 39 CommBank accounts between 10 October 2014 and 19 January 2015 (Strike Force A2). NSW Police advised CommBank that it was investigating money laundering and structuring on these accounts on 20 March 2015.
34. Between 31 January 2012 and 18 April 2016, 276 cash deposits under $10,000 totalling $1.7 million, were deposited into 6 of the Strike Force A2 accounts. On 20 March 2015 NSW Police advised CommBank that it believed these 6 accounts had been specifically generated for the purposes of money laundering. On 11 occasions, CommBank failed to report $1,250,534 in cash deposits to 5 of these accounts that it suspected were structured, contrary to s 41. CommBank failed to monitor these customers with a view to identifying, mitigating and managing MLITF risk.
Additional suspicious matters involving structuring, IDMs and unlawful activity Unregistered remittance business
35. Having identified patterns of suspicious cash deposits into IDMS, in mid-2015 CommBank carried out a review of all customers that made 3 or more ATM cash deposits over $5,000 since 1 January 2015. This review resulted in CommBank suspecting a number of customers as being linked to unlawful activity. CommBank failed to report its suspicions with respect to 1 of these customers who was suspected of running an unregistered remittance service.
36. CommBank had previously failed to report suspicions with respect to this customer. Between 25 June 2014 and 14 July 2014, 85 cash deposits, both large and structured, at branches and through IDMs and totalling $491,724, were made into this CommBank account. CommBank failed to report its suspicions in relation to this customer and the $491,724 in third party cash deposits, contravening s 41 on 2 occasions. CommBank failed to monitor this customer with a view to identifying, mitigating and managing MLITF risk.
January 2017 IDM deposits
37. Over 5 days In January 2017, CommBank accepted cash deposits totalling $320,000 through IDMS into a single bank account. CommBank failed to submit an SMR to AUSTRAC reporting its suspicions in relation to both large and structured cash deposits, and reported suspicious third party transfers into this account late.
38. The Applicant seeks the following relief from the Court:
a.    Declaratory relief under s 21 of the Federal Court of Australia Act 1976 (Cth);
b.    Orders for civil pecuniary penalties under s 175 of the Act; and
c.    Costs.
39. By failing to comply with its Part A Program, CommBank has contravened s 82 of the Act on 9 occasions.
40.    By failing to file the Late TTRs within the time required, CommBank contravened section 43 on 53,506 occasions.
41.    CommBank has contravened s 41 of the Act on each of the 174 occasions that it failed to file an SMR on time, or at all, in relation to the money laundering and cuckoo smurting syndicate accounts, and other accounts the subject of structured and large cash deposits, where it had formed a suspicion that it held information that may be relevant to the investigation or prosecution of an offence, including identity fraud.
42.    Having identified suspicious activity on accounts the subject of structured and large cash deposits, CommBank failed to monitor customers in relation to the provision of designated services with a view to mitigating and managing the MUTF risk reasonably faced. In some instances due to the lack of transaction monitoring alerts or the timely review of those alerts, CommBank failed to monitor customers in relation to the provision of designated services with a view to identifying, mitigating and managing the MUTE' risks reasonably faced. CommBank's conduct in respect of 71 of these customers is in breach of s 36.
43.    As a result of the failure to file TTRs and SMRs on time or at all, in accordance with the Act, AUSTRAC and other law enforcement and designated agencies have been deprived of information which the Act is intended to provide. Non-reporting and late reporting both delays and hinders law enforcement efforts. Delays in this case have resulted in lost intelligence and evidence (including CCTV footage), further money laundering and lost proceeds of crime.
44.    It is essential to the integrity of the Australian financial system that a major bank such as CommBank has compliant and appropriate risk-based systems and controls in place to deter money laundering and terrorism financing. The effect of CommBank's conduct in this matter has exposed the Australian community to serious and ongoing financial crime.
Date: 3 August

Psychopaths Destroy Democracy

  Uploaded - Thursday, July 27, 2017

Cartoon credit: Gary Markstein 
Why this cartoon? It shows how a successful psychopath might be working. The art of the skilled psychopath is to manipulate so "victims" don't know that they are being manipulated, e.g. through the projection of false masks or distracting "realities". High functioning psychopaths are up to 20% of corporate managers, a similar proportion of low functioning psychopaths are in prison populations. Politicians often rate high on this scale.

Psychopaths are Destroying Democracy

Psychopathy is generally regarded as incurable. Modern research suggests it is caused when the empathy circuits do not develop by age 4 - after that it is too late because they depend on the organic presence of properly organized von Economo (spindle) neurons (VENs).

VEN's are quite rare and only exist in species that form complex groups, like humans, dolphins or mountain gorillas (pictured below). Dementia patients have had their VEN's badly damaged (but their surrounding brain cells are largely unaffected).

So it is useless to argue with a psychopath or to try to make them see reason. They understand power and potentially can be controlled in good strong communities by insisting on honesty, transparency and structured decision making.

The US destroyer Fitzgerald has officially been blamed for its collision with a Japanese cargo ship ACX Crystal. There was simply no-one on lookout in a busy sea lane and the captain didn't know. (The US refused to cooperate with the investigation.)

Likewise, so much is distracting the free press that no-one is really on watch - doing the hard analytical work.

Psychopaths lack the empathy possessed by these mountain gorillas, or the ability to truly participate in complex groups, as higher animals do.

Because they don't really participate, they are comfortable with looting a country's assets, emptying them into a tax haven and letting people die from lack of hospitals, schools, food and so on.

High functioning psychopaths are out of control

They damage democracy, business, financial institutions, jobs, children, education, nurses, doctors, the church, charities - and everyone suffers.

Once the pattern is recognized, and you give up any knee-jerk wish for an instant cure, there is a genuine cure which must be applied. Reasoning with psychopaths empowers them and weakens you - all it does is tell them your strategy.

Psychopaths understand power and can be controlled in good strong communities by insisting on honesty, transparency and structured decision making.

It is painstaking, very annoying, unglamorous - but it is the only cure, and it works.

It is necessary to accumulate the facts hidden by the psychopath for a confrontation which will bring back sanity.

It is like a jigsaw that lacks power or cohesion until the vital piece is found. A vital piece became public last week, but no media published its significance. Democracy is sick. There is a cure but not an instant one.

Media Asleep on the Watch

Ask your editor and email me if interested: Your media has missed one of the most important stories of the year, briefly described here. The WSJ and WaPo didn't even mention it. Reuters "mentioned" it and the NYT copied the "mention" - but they had no clue. Bloomberg & Law 360 did a tiny bit more with a little help from their friends (including yours truly). No media outlet saw the significance.

Critical Case Missed

Last Wednesday, the DOJ achieved its 5th Credit Suisse criminal conviction making 6 official events in the series starting with the Senate Hearings in February 2014. No single event gave the whole picture. All 6 events need to be understood and analysed. The contradictions, lies, massive and monstrous crime - all dressed up to look respectable.

The psychopath ONLY understands power - what we hold dear and of immense value means nothing to them.  

CS Conviction: Un-Prosecutable Crimes

  Uploaded - Saturday, July 22, 2017

Cartoon credit to LAT's David Horsey for brilliant artistic insight in the best CA tradition. For complete image, see background.
Lies, plain and simple

Wednesday's Criminal Conviction:
Stunning Details of Credit Suisse's Crimes

The East Virginia Federal Court and DOJ have just released damming insight into how criminal bank Credit Suisse intimidated its staff into committing deep crime, and then "threw them under a bus" if they were caught. Susanne Ruegg Meier pleaded guilty for her crimes as a senior manager at Credit Suisse Zurich, but she revealed stunning detail of:

how the bank tried to create "un-prosecutable" crime

Staff were dumped like disposable "single-use" objects. This was the 4th criminal conviction of the bank's "conscientious and dedicated employees". It completes the pattern established by the three earlier convictions of Andreas Bachmann, Josef Dörig and Michele Bergantino. The case is: U.S. v. Adami, 11-cr-00095.

Not a once-off, but a system template

The tragedy is that the bank is trying to get away with the fiction that this criminal conspiracy was restricted to tax fraud - rather than a practised system of criminal profiteering. The DOJ is an accomplice - I can testify to that from hard personal experience.

So what if the government received $8 billion in penalties, if the true damage - private and public - was many multiples of this.

Most of the time, the government "looked the other way" while bank crime ruined millions. 

The few cases that made it to court met the bank's army of lawyers, and were hobbled from the start, because:

criminal investigation powers and resources are needed to get the evidence hidden inside lying banks

Being caught was the crime

Susanne Meier was discarded and abused with the label "Bank Rogue" - not because she committed crimes - for that was management policy - but because she was caught. Meier said that she understood that the bank's Legal and Compliance Department were not even interested in actions which were criminal under US or other foreign law.

Court documents are clear that management intimidated these people so that they had no choice if they wanted to keep their jobs. Bachmann was told by management: "Mr. Bachmann: You know what we expect of you — don't get caught." He called it a massive conspiracy.

Meier completed the picture of bank management crime

However, Bachmann's most damming sworn evidence in his statement of facts was the bank management's scheme to move its dirtiest crime outside the bank:

14. Credit Suisse wholly owned a Subsidiary which originally employed Dörig as part of its senior management. In approximately 1997, a representative of Credit Suisse informed employees of Subsidiary that it was too risky for Credit Suisse to have Dörig form and manage nominee tax haven entities for U.S. customers from within Credit Suisse. Instead, Credit Suisse announced that the formation and management of nominee tax havens should be done from outside Credit Suisse. Credit Suisse instructed Dörig to form his own company that specialized in the formation and management of nominee tax haven entities.

Meir's statement of facts showed how these so-called "external entities" were in fact nothing of the sort. Meier detailed how:

Dorig's so-called "external tax haven entities" were treated in practice as if they were internal sections of the bank.

Bank immunity through 3rd parties loses credibility

For decades, banks and other criminal entities have insulated themselves from criminal and civil liability by acting in proxy through third parties.

SCOTUS even went so far as to institionalize such protection of crime through Stoneridge and Morrison.

However, in the case of Credit Suisse and Dorig's shell companies, the claim for 3rd party status for its proxies should not be recognized by a court.

Both the employees and Dorig's shell companies are acting as non-independent proxies.

For a 3rd party to protect the "instigator", it has to be an independent entity, but in this case:

The "3rd party" was an instrument of the bank, and not able to act independently.

Criminal banks typically prefer to structure suspicious transactions between “multi-jurisdictional compartmentalised entities” where document ownership is quarantined amongst a number of its wholly-owned entities across multiple jurisdictions and languages.

So the customer/victim does not have ownership rights of the documents he needs to prove damage (according to the “bank’s legal doctrine”).

Under civil law, most judges (who may have been inappropriately “politically appointed”) are reluctant to overrule this principle and may use the doctrines of comity and “Forum non conveniens” to evade the tricky legal questions which the bank would otherwise be likely to press.

The result: the bank can commit horrendous crimes and no-one will touch it. Victims who try to fight this system only lose possibly huge legal fees on top of the original damage. Lazy judges take the easy way out, like nearly everyone else who has the responsibility, power and authority to genuinely help bank crime victims. The result has the superficial resemblance to "due process" while concealing sadistic cruelty and injustice towards the innocent. Propagandists spew that the bank was innocent and committed no crimes.

This has been the template for countless billions of dollars of crime, much of hitting "mums and dads" who are still waiting for the tiniest amount of compensation, or the smallest suggestion of an apology.

Damming indictment of bank executives

Bank CEO Brady Dougan blamed bank rogues for its massive criminal conspiracies. He defended the managers as being deceived by the rogues. When confronted by the criminal travel practices which were described by Meier, he said it was all the fault of the rogues, not their managers. His dubious sworn testimony was recorded.

The main points are shown in this 9 minute video.

What is a Bank Rogue? from Paul Morjanoff on Vimeo.

The documents shown in the video are the same type as referred to in Meier's testimony. To me, it is obvious that CEO Dougan was committing perjury. He emphasized that management did not know about the tax fraud conspiracy, but the evidence and even his own facial expressions, indicate otherwise.

Censorship: Wall Street Journal declined to report Meier's conviction!

The Wall Street Journal (WSJ)  has so far declined to publish any mention of Meier's conviction. This conceals from investors the truly evil management constructions used by the bank to intimidate staff - so that they would commit the crimes which boosted executive bonuses.

As a business journal, the WSJ certainly would have been notified of it in their news feeds on Wednesday, but there must have been a decision to ignore the story.

Reuters mentioned Meier's conviction but gave little detail (they hadn't read the statement of facts).

The NYT reprinted Reuters inadequate coverage (cheap?) The NYT ought to promote themselves as an uncensored "Fair, balanced and reliable" source of business news, instead of misleading investors with "half-truths".

The only prize goes to David Voreacos at Bloomberg who did report some of the more important details from the statement of facts.

However, this blog is the only place you will read all the important details without getting the documents yourself through PACER.

Extraordinary statement of facts

These extracts from the extraordinary statement of facts have not been published anywhere else (except for a few by Bloomberg  and Law360 subscription outlets):

9. ……. Upper management imposed goals on Markus Walder, who pressured Rüegg Meier to achieve the performance goals for accounts which she personally managed, as well as for the North American desk, and if she was unable to do so with her current client base, then either to find new clients or to obtain new assets under management from existing clients. 
18. ….. Walder emphasized to Rüegg Meier that it was her responsibility to meet Credit Suisse's performance goals, regardless of the Credits Suisse internal directive, and that Rüegg Meier had to do whatever it took in order to meet those goals.
21. …… Credit Suisse provided relationship managers the option to obtain "travel" account statements that bore no logo and were devoid of either account or customer identification information.  ……
22. Credit Suisse provided Rüegg Meier and other travelers with business cards that carried no logo for them to use when traveling to the United States. The cards had only the travelers' names, an alternative street address for Credit Suisse, that is a street address for the rear entrance to the office where the Defendant actually worked, and office numbers. Ruegg Meier understood that Credit Suisse provided her with logo-less business cards in order to assist her in concealing the nature and purpose of her business.
29. …. On numerous occasions, Dörig submitted false Forms W-8BEN to Credit Suisse through Ruegg Meier, Bergantino and other relationship managers. The Forms W-8BEN that Dörig provided to Credit Suisse falsely represented that the nominee tax haven entity, or structure, was the beneficial owner of the assets in the undeclared account, and not the actual owner, the U.S. customer.
30. U.S. clients used the structures to create the appearance that the account assets were owned by the structures and controlled by independent fiduciaries, such as Dörig, and that the U.S. clients had no ownership interests in the assets. However, the U.S. clients, the relationship managers and the fiduciaries all treated the accounts as though they were really controlled by the clients. For example, only fiduciaries, like Dörig, had written authority to direct activities in the accounts. Nevertheless, the Defendant routinely met with the U.S. clients and took instructions from them, and later sought a written order from Dörig to ratify the instructions and to make it appear as though that Dörig had issued the instructions.
31b. Rüegg Meier assisted a few U.S. customers to conceal their undeclared accounts by facilitating withdrawals of large quantities of cash from Credit Suisse in Zurich. For example, … Ruegg Meier assisted the customer in closing the account by withdrawing approximately $1 million in cash. … to find another bank simply by walking along Bahnhofstrasse in Zurich …. The customer placed the cash into a paper bag and exited the bank.
32.  ….  However, to the best of Ruegg Meier's knowledge, none of her subordinates or other co-workers were ultimately disciplined or suffered adverse employment consequences for violating U.S. law and Credit Suisse policy by providing investment advice in the United States. Indeed, Ruegg Meier and other relationship managers deemed providing investment advice in the United States essential to retaining clients.
33. Just as he had pressured Ruegg Meier and others on the North American desk to travel to the United States in order to meet sales goals, Walder expected bankers to call into the United States and to attempt to make sales in the United States even though they were explicitly prohibited by U.S. law and Credit Suisse policies from doing so. …

Chris Wray - v - the People

  Uploaded - Saturday, June 10, 2017

Bank Crime Kills Innocent People
Chris Wray - v - the People

A Million Lives Lost
The Great Recession of 2008 was responsible for around half a million cancer deaths plus many others from suicide, heart attack, stroke, stress induced disease and more from other causes. There were over 20 million job losses
The illegal spying program, Stellar Wind and the corrupt firing of 11 US Attorneys which followed it are not known to have saved lives.
If the program had been legally compliant, it could have been useful and might have saved lives.

However, bank crime was protected.

Source data:
Effects of the Great Recession
Financial crisis caused 500,000 extra cancer deaths, according to Lancet study
Great Recession Linked To 10,000 Suicides

The World Chris Wray would Walk into as FBI Director

This article shows how the White House dumbed itself down through corruption.
It was blind to losing half a million lives from sabotage of the financial system.

Chris Wray has been nominated to take the place of FBI director James Comey, who stood up to President Bush.

Comey emphatically insisted that "
intelligence under the law is the only sustainable intelligence in this country". 

Both Wray and Comey joined - and left - the spying program at about the same time. 

Comey won one battle but lost the war while his junior, Wray was watching and learning the system.

If Comey had been able to read this article about his future, then, history would be different and many of those half million people would likely not have died.

We hope and pray that Wray does read this article, because our purpose is for him to create the epithet: Chris Wray - And - the People

Chris Wray and James Comey - v - Stellar Wind

Chris Wray and fired FBI director James Comey both joined the tiny exclusive group that even knew of the existence of the Bush administration's secret illegal wire-tapping and electronic surveillance program called Stellar Wind, at around the same time.

Stellar Wind was the code name used to protect the secrecy of the existence of the President's Surveillance Program (PSP). 

Title III of the Foreign Intelligence Surveillance Act Amendments Act of 2008 required regular comprehensive reviews of the Program. These regulations were enacted following Watergate to prevent the White House from abusing its power, e.g. allowing criminal entities (like criminal banks) to damage the financial and political systems, e.g. just to vacuum trillions of dollars out of the economy into secrecy jurisdictions. This would, of course, leave state, service and infrastructure systems so impoverished that they would be forced sell themselves, just to exist. 

Many claim this is just what happened.
It is beyond doubt that it has happened to some very tragic degree.

Stellar Wind was a Criminal Monstrosity

The head of the Office of Legal Counsel (OLC), Jack Goldsmith examined Stellar Wind and concluded it: “was the biggest legal mess I’d seen in my life.” His team believed it had clearly included at least two criminal felony violations.

James Comey was blunt: he couldn’t find a legal basis for the program. “The analysis is flawed — in fact, fatally flawed. No lawyer reading that could reasonably rely on it”.

Stellar Wind had to be re-authorized every 45 days and both Attorney General Ashcroft and Comey refused to do this. Ashcroft suddenly became ill and was near death in hospital. His wife, Janet gave strict orders that no-one could see him. President Bush phoned, over-ruled Janet and arranged for Andy Card and Alberto Gonzales to see Ashcroft - to pressure him to sign the authorization. 

Janet called Ashcroft’s chief of staff, to warn him - and he called Comey, who at that moment was driving home. Comey ordered his driver to the hospital; they drove “Code 3” all the way— lights flashing, siren wailing, engine revving. It was the night of March 10, 2004. He had ordered his men (FBI agents at the hospital) to protect Ashcroft, meaning to use force if required against the Secret Service agents coming with Gonzales.

Comey arrived at Ashcroft's bed minutes before Gonzales. The drugged Ashcroft told Golzales he couldn't sign it, blaming the White House for depriving him of the necessary resources. Jack Goldsmith said later that it was such an amazing scene he thought Ashcroft would die on the spot.

Not to be outdone, on March 11, 2004, President Bush arranged for Gonzales to (illegitimately) sign a new type of authorization. He claimed the role of "Commander in Chief" as being above the law - and over-riding the Watergate inspired protection. Comey, Ashcroft and FBI directer Mueller knew this was fake and dangerous in the extreme - and prepared to resign. They had sworn to uphold the constitution and refused to be part of something so sinister.

They had thought that this was the end of their careers, but valued something far higher which they would not betray.

Ashcroft was too sick to resign then and asked the others to wait a few days until he was stronger. In those few days, word got out and around 30 top DOJ and FBI execs joined in. 

Chris Wray, then assistant attorney general in charge of the Criminal Division, stopped Comey to say, “Look, I don’t know what’s going on, but before you guys all pull the rip cords, please give me a heads-up so I can jump with you.

By the time Comey finally made it to the White House, word was out that an uprising of epic proportions was under way.

How was the Criminal Monstrosity Created?

Manipulators often use a cynical trick: hire someone incompetent, isolate them, starve them of resources, make it impractical for them to speak out, then "coach" them to produce the outcome you want, regardless of its illegality. The poor victim takes responsibility, and is fired, jailed or called a "lone rogue" if things go bad. The poor victim might be doing his honest best in impossible circumstances and screams "injustice" when he is scapegoated. But, of course, that is exactly the purpose of a scapegoat. Top dog goes free, or maybe is labelled a "hero" with a "huge bonus".

Bush and Gonzalez chose OLC Deputy Assistant Attorney General John Yoo to write the first series of legal memorandums supporting the Stellar Wind. Yoo was the only OLC official permitted access to the program from inception until he left the DoJ in May 2003. He later said much of it was outside his area of competence and that he was not well versed in criminal law.

Later, Patrick Rowan, a senior counsel in the Criminal Division, was read into Stellar Wind with his supervisor, Christopher Wray. Wray reported that after his and Rowan's read-in, they "were kind of left on our own." He said that no one directed him or Rowan or tell them to develop any judgements or opinions on the subject. Rowan reported it was very difficult to work on the matter because of the secrecy surrounding the program and other demands of his job: “Because there were no additional attorneys within the Criminal Division who were read into the program (and very few in the Department generally), we have been unable to assign work to others or to fully consult with others within the Division.”

Charlie Savage at the NYT made a FOIA request to get the OIG (Office of Inspector General) report on Stellar Wind declassified. The first major version in April 2015 was heavily redacted by the DOJ. He appealed and in September 2015 a court authorized a less redacted version. (Earlier versions had been released by Wikileaks and the Government).

I studied the differences between the two major versions to find reasons for the heavy redaction, much of which looked unnecessary. This led me to believe that much of the redaction was a "cover-up" for embarrassing content - like: laziness, incompetence, corruption or a criminal intent to pervert the system for illegitimate gain.

For example, the following section appears in the September 2015 version, but was redacted in the April 2015 version. There was no security related content, but it shows embarrassing content. Management was simply not trying to comply with the law, but only creating an ineffective facade. Government money was being wasted to appease the need for appearances, while concealing an illegitimate intent:

Wray also told us that there was no organized Departmental effort to establish formal procedures for reviewing international terrorism prosecutions to comply with Rule 16 disclosure requests and Brady obligations. He said "the thinking was" that the Rowan memorandum was the "first step" toward devising "some kind of systematized process" for such reviews. However, we found no indication that OLC followed up on Rowan's request to further study these discovery issues with any kind of written product.
(Editor Note: Brady obligations refer to pretrial discovery while Rule 16 refers to Pretrial Conferences)

A more serious example is the justification used by President Bush to get the program re-authorized without Comey or Ashcroft. Again, this is only shown in the September 2015 version released by the court. The DOJ redacted this content in its April 2015 version, but there was no security content which would justify the redaction, which is shown here in italics:

A. The first significant difference between the March 11, 2004, Presidential Authorization and prior Authorizations was the President's explicit, assertion that the exercise of his Article II Commander-in-Chief authority "displace[s]the provisions of law, including the Foreign Intelligence Surveillance Act and chapter 119 of Title 18 of the United States Code (including 18 U.S.C. §2511(f) relating to exclusive means), to the extent of any conflict between the provisions and such exercises under Article 111.]"

President Bush decreed that he can "displace[s]the provisions of law".

Above the law - and done in secret so that nobody knows. 

How was the Criminal Monstrosity Justified?

John Yoo wrote the first series of legal memorandums justifying Stellar Wind. He was isolated, deprived of resources and writing about things for which he was unqualified. We speculate he may have been coached or intimidated, because no reasonable lawyer would have written what he wrote. This was the emphatic opinion of James Comey, Jack Goldsmith, John Ashcroft and FBI Director Bob Mueller - whose opinions in this matter are more reliable than those of Yoo. 

Yoo "justified" the Stellar Wind program by the President's Commander-in-Chief authority under Article II of the Constitution during wartime. But there was no war.

The new authorization was also justified using the President's wartime powers, based on Yoo's memorandums. It was almost instantly created - within a day. This was despite the fact that Yoo had left long before Comey arrived and nearly a year before the confrontation in March 2004.

Gonzales' incredible speed ("Speedy Gonzales") at producing the "wartime" excuse for illegally continuing the criminal surveillance of private people strongly suggests that he was an author of the original fake justification - not Yoo. We speculate that Yoo was coached to regurgitate the specious wartime fake argument and a far more credible scenario is as follows:
  • Extreme secrecy meant it would be very unlikely to ever be exposed.
  • Charlie Savage had to go to extreme lengths to get it released & even then it was so buried in detail he missed it.
  • Yoo would be sent to prison if he "blew the whistle" on this criminal manipulation.
  • It was based on the near universal principal that whistle-blowers are jailed or killed while the real criminals are "public heroes" for "pretending to save lives"
  • Stella Wind never saved even a single life, suggesting that its real motivation was otherwise.
  • The real motivation was more likely to allow criminal surveillance of criminal bank opponents. See HSBC corruption below.
What was the Intent of the Criminal Monstrosity?

In our opinion, there was mixed intent. Following 9/11 there was a need for better intelligence on terrorist threats.

It looks like a legitimate justification was used for corrupt purposes.

Soon after Comey's confrontation with the White House, an even more sinister scheme was conceived.

The White House had lost the first battle with the DOJ - so how could they make certain that they would never lose any more?

The plan: promote Gonzales to Attorney General, and stack the DOJ with "loyal Bushies", i.e. sycophants who would not dare to throw a "Comey".

Comey was simply upholding the US Constitution. Bush wanted to act illegally and unconstitutionally - so Comey objected, as he swore he would when he accepted the job.
The compromise which was worked out between Gonzales and Comey didn't work - illegal surveillance continued to current times according to majority opinion.

In fact, it became much worse. The later XKeyscore spying system allowed an operator to wiretap and scrutinize the communications of any American, according to Edward Snowden.

The epic confrontation with the president was too exhausting and ineffective to repeat. Around a year later, both Comey and Wray had had enough - they both left for private practice. Ashcroft had gone, Gonzales had been promoted above them and they had to watch Karl Rove in action with Gonzales - with the smearing and eventual firing of very good US Attorneys.
Comey testified later that the DOJ had become political.

The Firing of Good US Attorneys

Eleven US Attorneys were fired.

The process started soon after the Comey confrontation above. The witch hunt was partly to find who were "loyal Bushies", partly to find who was investigating Republican corruption, partly to find who wasn't following orders in investigate "imagined Democratic voter fraud" (it didn't really exist except in the imaginations of certain Republican party hacks), and one case to artificially create a vacancy so that Karl Rove's former assistant could become a US Attorney.

Fortunately, Congress investigated and Gonzales, who had been promoted to Attorney General (!), was forced to resign. Karl Rove refused to testify or cooperate and exiled himself to Sweden where he was friends with the Prime Minister and others.

The first one to be fired was Thomas DiBiagio. He was officially fired on January 2, 2005, but there was a very nasty and time consuming process the White House had to go through to get rid of him which probably started around the middle of 2004.

Regardless of how efficient, well-regarded or honest they were, (in most cases) their reputation and record was smeared to enable dismissal on "the performance related grounds" as specified by the Patriot Act. 

DiBiagio stated that he was ousted because of political pressure over public corruption investigations into the administration of Republican Gov. Robert L. Ehrlich Jr.

All the above people were Republicans or Republican appointed, including Comey, Wray, Ashcroft, Mueller  Goldsmith and the US Attorneys. It was a very significant betrayal of basic humanity to destroy the reputation of trusting, loyal, efficient people whom the White House had willingly appointed, merely for selfish gain. (Comey recently left the Republican party and is now independent.)

You might call it ruthless with no redeeming features.

Criminal Bank Corruption Supports Politicians

Where is the real pay-off? There must have been a strong motivation for all of this. There are some smoking guns which plausibly give answers.

Stellar Wind generated massive data on any ordinary American person. Edward Snowden claimed: “If I had wanted to pull a copy of a judge’s or a senator’s e-mail, all I had to do was enter that selector into XKEYSCORE,” one of the NSA’s main query systems.

The utter ruthlessness of the White House to the best, most honest, and efficient Republican US Attorneys was likely reflected in a corresponding ruthless handling of the illegal private data it harvested through Stellar Wind.

Logically, it would think nothing of tracking big bank opponents for any dirt they could find on them. Here are some hypothetical examples.

HSBC Corruption and SDNY

HSBC bank was guilty of mind-boggling money-laundering on behalf of murderous drug cartels, terrorists and sanctioned states. Over 4 years, it processed an incomprehensibly huge number of transactions without any review - around 67 million wire transfers totalling over $200 trillion.
However, it did review and report to the Internal Revenue Service (IRS) 3 transactions totalling $10,000 from Elliot Spitzer, who had legitimately prosecuted several big banks. Millions of SARs (Suspicious Activity Reports) are generated each week and flow into the IRS nationwide, but Spitzer's were singled it out for attention to criminal investigators.

While Spitzer's name was flashed across the world for 8 months, forcing his resignation, the Republican US Attorney Michael Garcia s.l.o.w.l.y decided that there was no charge to press. Incredibly, the name of the reporting bank - HSBC - was initially kept secret. 

The White House had set up a grotesque situation. They fired US Attorneys for not prosecuting Democrats, and because they investigated Republicans for corruption, and because they were not "loyal Bushies". 

Logically, that means that Michael Garcia survived by being generally in a category of US Attorneys who did investigate Democrats, refrained from prosecuting Republicans and was a reasonably "loyal Bushie". His team can't be assumed to be innocent - he is required to make every diligent effort to show he was not corruptly tainted - which he clearly did not do. His team's actions suggest the opposite - a tainted process which predictably maximized damage on a Democrat governor who was never charged.

I personally reported organized crime in Credit Suisse bank operating through his district (SDNY) and sent overwhelming evidence of this. I personally spoke to the investigator who received my reports, so I know first hand their attitude. To put it mildly, it was not a good, professional or remotely reasonable attitude.

My message was clear - Credit Suisse had a very big criminal operation going through SDNY which was a danger to the world's financial system.

Since then, my warnings have been 1,000% confirmed. The world's financial system nearly collapsed because of the type of crimes I was warning Garcia's Office of. Credit Suisse was criminally convicted of crimes going back decades involving hundreds (probably thousands) of employees using Mafia-like strategies of secret remote controlled elevators etc. The very worst centre was in New York, under Michael Garcia's nose, where I warned him it was.

A recent US Congress report describes how the DOJ blocked the criminal indictment of HSBC despite its stupefying criminal abuses. Download that report here and the summary here

The Brink of Possible Catastrophe

A recipe for catastrophe: the continued persecution of criminal bank whistle-blowers while massive bank crimes are let off with a "slap on the wrist" or ignored or  hidden.
There are many more examples, e.g.:
William Lerach representing Enron pension funds, was jailed gutting the victims' litigation, while massive bank crimes were ignored
Herve Falciani's HSBC warnings were ignored by the DOJ, he became a victim of murder attempts until given French government protection.
HSBC didn't check $200 trillion in wire transfers allowing Mexican and Colombian drug and murder cartels to launder an immense fortune of criminal profits.
The DOJ has told the Second Circuit to overrule a lower court’s decision to partially unseal a report into HSBC's failures to combat money laundering. It appears that the DOJ is unrepentant and it is still concealing crime in banks.
Bradley Birkenfeld exposed massive criminal practices by both UBS & Credit Suisse, but was jailed.
The emasculation of SEC Enforcement (Commissioner Gallagher was complicit)  
The failure of DOJ Financial Enforcement (refused to seriously act against most crime in banks especially Credit Suisse). 

Chris Wray: Can He do the FBI Top Job?

There are many things he needs to answer for at his hearing. On the face of it, he appears skilled at helping criminal banks like Credit Suisse to escape fair consequences for mammoth crimes and at helping flaky politicians like Christie to hide his cell phone with the vital evidence it contained of his suspected participation in Bridgegate.

Governor Christie was never called to account for his breach of responsibility regarding Bridgegate, but guess who paid for his legal expenses? Taxpayers and toll-payers. The victims are further victimised. There is an old saying which may give insight: "never give a sucker a break". 

Wray also helped a client who was an energy company president in a criminal investigation by Russian authorities. Obviously, such achievements make him highly attractive to a certain category of wealthy client.

However, he only wanted to advertise the Russian part of his experience up until around November 2016 because he has since removed it from his public bio. It is still stored on the web archive Wayback machine. Any credible hearing on his appointment will need to expose whatever significance this might have.

Wray was the assistant attorney general overseeing the criminal division under George W Bush, in charge of investigations into corporate fraud. This was the "golden age" of criminal banking and corporate fraud, where politically connected corporations were so wealthy from illegitimate riches that they could donate fantastically to both the Republicans and the Democrats. He oversaw the Enron whitewash where the criminal banks who were at the root cause of Enron's collapse and the destruction of pension funds investments, were not prosecuted for their crimes. Instead, the DOJ jailed the successful lead attorney for the victims over what was, in comparison, a triviality out of all proportion to the banks'crimes. Credit Suisse escaped almost free for its role, if you ignore the cost of its enormous "army of lawyers". Meaning that once again, it paid nothing to its victims, with the help of its conscience-less lawyers.

The history of the DOJ and SEC regarding the Great Recession and its causes scream a massive lack of proportionality. Small entities were hounded into oblivion while the biggest criminals enjoyed protection and preference. Wray's history in the DOJ and since is entirely consistent with this indescribable tragedy.

These are not the skills the USA needs of the next FBI director.

Comey was brave enough to stand up to Bush and company - but sadly, it was a failure. The loyal Bushies went on to bigger and more sinister corrupt activity, including perverting the government's secret surveillance of its citizens into a criminal operation. We speculate it was used to protect criminal banks and persecute whistle-blowers, which is simply the normal practice of corrupt regimes everywhere.

In the end, Comey and Wray realized they had lost the important battles and abandoned the DOJ for private practice, as most ordinary sensible people would probably have done. The DOJ continued its downward spiral until the financial system imploded. The "people's recovery package" largely went to the rich and powerful, often through gob-smackingly outrageous corruption, and now trillions of dollars have been sucked out of the US economy into secrecy jurisdictions. Junior school economics tells us that this is setting us up for an even bigger version of the "Greatest Recession" ever.

The USA is suffering from financial anaemia and has difficulty breathing. It needs more iron in its system to get its oxygen back, so it can run again. The rest of the world is generally in a corresponding situation. If no-one fixes it, there will be a blockbuster sequel to the Great Recession.

The past is not necessarily a reliable indicator for Chris Wray's future performance, but Wray has not yet shown indications of producing what is needed of him. IF he is serious about doing this job (he will have to swear to uphold the constitution, including when that means acting against the president), and IF congress and the president are serious about getting things fixed, then they will all need to wake up and demonstrate something far more intelligent than we have seen to date. Things can change, but as of today, Chris Wray's biggest selling point is that the President could appoint someone far worse, and that's not nearly enough for what the USA needs, even if it gets him a job and a pension when the world gets another financial crisis.

Chris Wray v the Law

  Uploaded - Thursday, June 08, 2017

Chris Wray - v - the Law

President Trump has nominated Chris Wray to be the Director of the FBI, replacing Comey whom he fired because of his investigation of Russian sabotage of the US Presidential election.

Chris Wray obtained fame because of the way in which he represented criminal bank Credit Suisse. He obtained incredibly lenient consequences for the bank's horrendous crimes.

1. He  served as a member of the Bush administration’s corporate fraud task-force
President George W. Bush's corporate fraud task-force was so successful at protecting corporate crime that we had the Great Recession.
Being part of that failure is hardly a recommendation.

2. He led the fraud investigation of Enron Corp.
This was another spectacular failure to administer justice for the taxpayers who paid his salary. The Enron criminal conspiracy was a partnership between a small number of individual executives and big banks like Credit Suisse. The banks were never prosecuted for aiding and abetting the fraud or for criminal conspiracy when there was abundant evidence. Informed observers had little doubt regarding their responsibility. Only the banks had the capacity to pay compensation to the pensioners victims. After having looted massive profits from their dirty deals, some of the involved banks like Credit Suisse paid almost nothing, except for their "army of lawyers". The victims had no "private right of action" which put responsibility for executing civil justice with Wray and his team - who did almost nothing in this respect.

However, the DOJ did put William Lerach in jail. He was the highly effective attorney leading victims' attempts to negotiate billions of dollars compensation from the Enron banks. Once he was jailed, the victims' efforts fell to pieces - they got almost nothing more. "Lucky Credit Suisse" escaped Lerach's clutches with DOJ assistance. 

3. The record confirms the draconian treatment of opponents of criminal banks while massive bank crimes were ignored: William Lerach (representing Enron pension funds, but was jailed), Herve Falciani (ignored by the DOJ, a victim of murder attempts until given French government protection), Bradley Birkenfeld (exposed massive criminal practices by both UBS & Credit Suisse, but was jailed), Eliot Spitzer (prosecuted many criminal banks but reported by HSBC & forced out of office), the emasculation of SEC Enforcement (Commissioner Gallagher was complicit) and the failure of DOJ Financial Enforcement (refused to act against most crime in banks especially Credit Suisse). 

Does He Even Know the Law?

Since leaving the DOJ, he has mostly defended rich corporate clients. Cynics complain that there was no real change to what he was effectively doing with the DOJ.

He represented Credit Suisse in its 2014 criminal conviction and settlement. In our opinion, he flouted the law to help engineer a white-wash settlement for monumental crimes by the bank which crippled US finances. It was a deceitful settlement of convenience which froze ordinary victims out of the "cozy settlement".

Here are extracts from the Transcript of the Plea Agreement Hearing which is: Document 17 Filed 05/27/14, Case 1:14-cr-00188-RBS, Eastern District of Virginia:

Now, in order to proceed, again, the Court places you under oath. Once you're placed under oath, all of your answers have to be full and complete and truthful. If they're not, you yourself and/or Credit Suisse can be subjected to a further prosecution for perjury or making a false statement to the Court.
 (Credit Suisse was placed under oath to make all answers full and complete and truthful.)

THE COURT: And this particular plea agreement, then, represents the full understanding of the United States and Credit Suisse AG?
MR. LYTLE: That's correct, Your Honor.
THE COURT: Now, I would ask you, Mr. Wray: Is that your understanding as well?
MR. WRAY (Counsel for CREDIT SUISSE AG): That's my understanding as well, Your Honor.

THE COURT: All right. And I would also ask you, Mr. Reifenberg: Is that your understanding?
MR. REIFENBERG (CREDIT SUISSE AG'S REPRESENTATIVE): That's also my understanding, Your Honor.

In summary, Chris Wray and the others swore that the Plea Agreement, which includes the Statement (Stipulation) of Facts, represented the full understanding of both parties.

The only problem is that this was rubbish.

Both Credit Suisse and the DOJ knew far more than was stated. It was a cover-up.

Here is the legal context. (Note: Statement of Facts and Stipulation of Facts are interchangeable terms.)

The United States Sentencing Guidelines (USSG) Manual §6B1.4 states:
(a) A plea agreement may be accompanied by a written stipulation of facts ….. stipulations shall:
(1) set forth the relevant facts and circumstances of the actual offense conduct and offender characteristics;
(2) not contain misleading facts; and
(3) set forth with meaningful specificity the reasons why the sentencing range resulting from the proposed agreement is appropriate.
(b) To the extent that the parties disagree about any facts relevant to sentencing, the stipulation shall identify the facts that are in dispute. ……
 (d) The court is not bound by the stipulation……

This provision requires that when a plea agreement includes a stipulation of fact, the stipulation must fully and accurately disclose all factors relevant to the determination of sentence. This provision does not obligate the parties to reach agreement on issues that remain in dispute or to present the court with an appearance of agreement in areas where agreement does not exist. Rather, the overriding principle is full disclosure of the circumstances of the actual offense and the agreement of the parties. The stipulation should identify all areas of agreement, disagreement and uncertainty that may be relevant to the determination of sentence. Similarly, it is not appropriate for the parties to stipulate to misleading or non-existent facts, even when both parties are willing to assume the existence of such "facts" for purposes of the litigation. Rather, the parties should fully disclose the actual facts and then explain to the court the reasons why the disposition of the case should differ from that which such facts ordinarily would require under the guidelines.

Was Wray Ignorant?


Wray previously represented the same bank Credit Suisse, regarding its billion dollar money-laundering for the world's number one state sponsor of terrorism - Iran.
Wray also signed the deferred prosecution agreement which included the horrendous Statement of Facts.
The bank had created a sophisticated criminal scheme to deliberately flout US sanctions using an outrageous arrangement involving two of its Pension Fund managers.
No-one knows for certain if it used pension money to "wash" dirty money.

However, it is certain that higher management approval was essential to execute the criminal scheme, but no bank managers were prosecuted. 

Wray knew for certain what sort of a customer he was serving.

Imagine what would have happened if Wray had investigated a LGBT or Muslim person who laundered a billion dollars to help terrorists develop nuclear weapons and missiles? So much for his integrity and respect for the law.

We personally notified the DOJ of CS's criminal practices while he worked there. Even if, in the unlikely event, he didn't know when he signed off on the bank's terrorism money-laundering crimes, he absolutely knew then and continued to sell himself to that criminal bank.

Then he not only signed off on the bank's criminal conviction for sabotaging the integrity of the US tax system, but he flouted the law in a manipulated illegitimate settlement which white-washed the bank's incredible crimes and "let ordinary victims rot in the gutter", in a similar manner to how they were treated in the Enron catastrophe.

Here is a summary:

Credit Suisse’s massive criminal misconduct / evidence destruction

US Attorney General Eric Holder, December 16, 2009: 
“…the criminal misconduct perpetrated by Credit Suisse in this case is simply astounding”; “created a 'how-to' book on committing a crime”;
“robbed our system of the legitimacy that is fundamental to its success”

Credit Suisse employees systematically stripped the identities of Iranian banks enabling funds to be transferred to the Atomic Energy Organization of Iran and the Aerospace Industries Organization, entities involved in the production of nuclear weapons and long range missiles. Credit Suisse advised Iranian banks such as Bank Melli and Bank Saderat on methods to hide their identities and send more than a billion dollars through New York banks.

Credit Suisse was fined $536m for violating US sanctions against Iran. Court documents  say Credit Suisse systematically hid the identity of its Iranian clients when moving millions of dollars on their behalf. 

The US Attorney General described it as : “…massive financial misconduct at one of the world's largest global banks, Credit Suisse. In both its scope and complexity, the criminal misconduct perpetrated by Credit Suisse in this case is simply astounding. Indeed, as set forth in the court documents filed today, this case offers a stark and disturbing example of the lengths to which some corporate wrongdoers are willing to go in seeking ill-gotten financial gains…… They created a 'how-to' book on committing a crime… Credit Suisse thought it didn't need to play by the rules…. Credit Suisse's decades-long scheme to flout the rules that govern our financial institutions robbed our system of the legitimacy that is fundamental to its success.”

It is feared that Iran will assist terrorists to explode a nuclear bomb in a US or European city – it has the ability to make “dirty” (highly toxic and radioactive) nuclear bombs. Credit Suisse may have effectively financed a future nuclear holocaust.

Thus CS funded the nuclear program of the world's “most active state sponsor of terrorism”, a central member of President George W. Bush’s “axis of evil”:

More Source Documents for the above are here.

Birds of a Feather Flock Together?

A serious contender for Director of the FBI needs to watch who he or she associates with.

Either, Wray was extremely careless, or  ....?

Iran - Qatar - Credit Suisse 

Qatar was the second largest shareholder in Credit Suisse. Jassim Bin Hamad J.J. Al Thani was on the bank's board and is the son of the prime minister.
Now Qatar is being isolated from the other main neighbouring states for allegedly supporting Iran and its terrorist activities. It fuels speculation of some type of Iran - Qatar - Credit Suisse coalition.


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