A new report finds that prosecution of financial fraud has fallen to a 20-year low. If you’re like me, you don’t believe that the financial industry stands at its cleanest point in the past 20 years.
The federal government is on track to file just 1,365 prosecutions for financial institution fraud in fiscal year 2011, according to a new report from a watchdog group. That would be the lowest number of such prosecutions in at least two decades.
The report, from the Transactional Records Access Clearinghouse at Syracuse University, comes at a time when the protest movement known as Occupy Wall Street has gained nationwide visibility — and no small degree of public support — by criticizing what its members see as a close relationship between big banks and the federal government.
The falling number of fraud prosecutions is striking given what many claim is a strong pattern of financial-sector misconduct in recent years, culminating in a housing crisis characterized by alleged rampant mortgage fraud and improper foreclosure, as well as the weakening of the national and global economy.
And these crimes continue. Yet another register of deeds, this time in Winnebago County, Illinois, has uncovered evidence of ongoing robo-signing, which is fraud against state courts and local recording agencies. Nancy McPherson has collected the evidence from her own office, and found hundreds of instances of this fraud:
McPherson’s office sampled a small number of foreclosure documents in her office and found hundreds of apparent forgeries.
“‘Linda Green’ is on documents as vice president of Wells Fargo. She’s (on other documents as) vice president of (Mortgage Electronic Registration Systems Inc.). She is vice president of Optical Mortgage Co. as well, and all of the signatures are completely different,” McPherson said. “Another name to take notice of is ‘Pat Kingston.’ She or he has several different titles. Lately, (the lenders or document providers) haven’t been using ‘Linda Green’ as much. There’s a new set of fake names. ‘Brian Blaine’ is the vice president of Chase Mortgage Bank. He is vice president of Washington Mutual Bank. He is vice president of Nations Credit Financial Services Corp. He’s vice president and attorney in fact for IndyMac Federal Bank.”
You can add to the ongoing fraud in the mortgage sector the situation at MF Global, which a Democratic commissioner of the CFTC acknowledges looks “nefarious.” Yes, that’s what I’d call a financial firm stealing money from depositors and using it on bets on their own account.
And you can just go down the line. Since the financial crisis, very little if anything has changed on Wall Street. And we know that accounting control fraud, fraud in representations and warranties and more conventional forms of origination and securitization fraud was a major feature of the crisis. Yet nobody went to jail. A new trend in federal oversight is deferred prosecution agreements, where firms self-report their crimes and win softer, if any, penalties. Agency budgets for the leading watchdogs of Wall Street have shrunk. The Justice Department is consumed with anti-terrorism business rather than the theft of public wealth.
Just this week, one of the first corporate CEOs has seen his bonus and stock profits clawed back, as per the Sarbanes-Oxley law. The company was accused of accounting fraud, but the CEO, Maynard L. Jenkins, was not personally charged for the misconduct. It’s part of another worrying trend, where nobody on Wall Street has to admit guilt for their crimes, even if they have to pay a penalty.
The two-tiered system of justice rolls on.