by Brian Mahany
For the longest time we have said that the Wall Street elite and big banks were simply “too big to care.” Popular media says they are “too big too fail.” After the Justice Department settled with HSBC Bank, we have added “too big to jail” to the list of their shortcomings.
This blog has long railed against the enforcement policies of DOJ and the SEC. Don’t get us wrong; we have the utmost respect for the trial lawyers and assistant United States attorneys that form the front lines. Unfortunately, politics at the upper echelons, an inadequate toolbox of powers given to the SEC by Congress and an in balance of resources lets many of the biggest and worst offenders walk.
The prime example this month is DOJ’s settlement with HSBC. Rated as one of the five largest banks in the world, HSBC has a tremendous amount of resources it can rally when faced with legal troubles.
Recently, prosecutors charged HSBC with laundering money for terrorists and Mexican drug cartels. While innocent children are dying on the streets of Monterey, Mexico and hundreds of our young men and women have died in the back allies of Iraq, the executives responsible for helping funnel hundreds of millions of dollars to terrorists get a slap on the wrist. A fine.
We have long complained that the SEC is nothing more than a PR machine. When it comes to blatant fraud, the SEC has no criminal enforcement powers. It can sue the wrongdoers and issue “cease and desist” orders.
Can you imagine the outrage if the local district attorney issued a cease and desist order to a gang member accused of murder or a child sex offender? Unfortunately, there isn’t much more the SEC can do to fraudsters.
The problems at the U.S. Department of Justice are a bit subtler. They have the authority to put people in jail. Resources, however, are stretched thin. And politics often gets in the way.
Criminally prosecuting Angelo Mozilo, former CEO of Countrywide Financial, for example might take 20,000 hours of investigative and legal work. Maybe more. For the same number of man-hours, however, the FBI, IRS and prosecutors could put dozens of smaller offenders away.
Mozilo was never prosecuted even though the SEC accused him of insider dealing and fraud. Instead, he settled and paid a fine. While Mozilo was enjoying his millions, taxpayers pumped billions of dollars into Bank of America, the successor to Countrywide.
Earlier I said “smaller” offenders, not ”lesser” offenders. Fraud is fraud and a stockbroker who defrauds the life savings from a retiree is no different than a corporate big wig that defrauds taxpayers of millions. It’s just a matter of scale.
Obviously, Angelo Mozilo wasn’t criminally prosecuted so I can’t call him a criminal. Ditto for the CEOs of Wells Fargo, Allied Home Mortgage and Goldman Sachs. Many people would argue, however, that they certainly behaved like criminals.
The recent settlement with HSBC is just one more bittersweet victory for Americans. While we are happy that Justice held them accountable and extracted a record $1.9 billion dollar settlement, monetary settlements in which the fraudsters admit no wrongdoing are hollow victories in our humble opinion.
The one bright spot are American juries and plaintiff’s lawyers. Victims of bank fraud still have a venue where they can be heard and often receive some justice. Although the bankers may not go jail, hurting them in the wallet can at least even the playing field a bit.
The fraud and asset recovery lawyers at Mahany & Ertl help victims of fraud get back their hard earned money. If you were the victim of a wrongful foreclosure, lost money to a Ponzi scheme, were victimized by an insurance agent or accountant selling a 419 or 412 welfare benefit scam or the like, we may be able to help.
Currently we are representing the whistleblower in the largest federal false claims act case pending in the United States; HUD’s $2.4 billion case against Allied Home Mortgage. Not every case is that large, of course, but if we take your case it becomes just as important.
For more information about what we do, please contact attorney Brian Mahany. All inquiries are protected by the attorney – client privilege and kept in strict confidence. Brian can be reached at or by telephone at (414) 704-6731 (direct).
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and coming soon, San Francisco, California. Services available in many locations.