Now We Know — The DOJ Ignored Two FCIC Citi Criminal Referrals!

Several items have recently hit the press regarding the financial crisis of 2008 which could lead to further investigation of what actually happened and who is responsible.

One that has me excited is the National Archives releasing the first of many documents of the Financial Crisis Inquiry Commission (FCIC) which have been sealed for five years!!! 

The media is already picking up on this and noted that the FCIC made a criminal referral for Robert Rubin, et al. in September of 2010. They discovered that ”Rubin reportedly blessed the increased risk taking at Citi … Their direct exposures to subprime bonds were $55 billion according to the Commission. The FCIC staff notes say that ”based on FCIC interviews and documents obtained during our investigation, it is clear that CEO Chuck Prince and Robert Rubin … knew this information.”

Fortune goes on to say, Prince and Rubin, were made aware of Citi’s exposure “no later than September 9, 2007.” Yet later that fall, “they told analysts that the bank’s exposure to subprime was just $13 billion, reporting it as 76% less than what actually was.”

But here’s the real blockbuster that Fortune and the other media have not found yet! They will, it’s there. In the records of the February 2011 business meeting it is noted that the FCIC also made a second Citi criminal referral based solely on my testimony and evidence. It is very unlikely that any other bank got two criminal referrals from the FCIC which were subsequently covered up and ignored by Attorney General Eric Holder(!) –  even though the Commission saw evidence that laws were possibly violated.

The motion for referral states:

Whereas, the Commission is instructed to refer to the Attorney General of the United States and any appropriate State Attorney General any person that the Commission finds may have violated the laws of the Unites States in relation to ( the financial crisis), and

Whereas, there have been presented to the Commissioners a memorandum concerning possible violations of the laws of the United States regarding the allegations made by Richard Bowen, and

Whereas, the Commission finds that laws of the United States may have been violated with respect to such matters

Now, Therefore, Be it Resolved that the Chairman is authorized on behalf of the Commission to forward the memorandum and accompanying exhibits to the Attorney General of the United States for further investigation and possible action.

(The FCIC February 9, 2011 meeting document record is available here,  page 3 and pages 63-65)

I gave extensive testimony and evidence in an interview with the Commission’s senior investigative and legal staff on February 27 of 2010. I also gave them evidence, including copies of the fraudulent representations given to Fannie/Freddie and purchasers of mortgage backed securities and a list of the securitizations that I knew involved fraudulent representations. Yet, while the testimony of Rubin and others could be read on-line on the Commission’s website, beginning in February of 2011, the transcript of my testimony, as well as all my evidence submitted, was locked up in the National Archives for five years!

However, my transcript has just been released (available here ) and was sent to the DOJ with the FCIC referral, and all of the evidence I submitted, which is referenced in the transcript, and is now listed to be released by the National Archives.

But what about this five year lockup period, and does it relate to Rubin and other Citi execs? As my friend, fellow founder of Bank Whistleblowers United, Gary J. Aguirre, lawyer, former investigator with the United States Securities and Exchange Commission (SEC) and himself a whistleblower queried in an email: 

One might be forgiven for asking: why the five year wait? Reminds me of something, but what is it? Oh yeah, that’s the statute of limitations. Rubin’s safe now.

Here’s my take on the running of the S/L on Wall Street crimes a couple of years ago: The five-year statute of limitations has all but run out on all of these frauds. Each passing day was meaningful for one reason: neither the SEC nor the Department of Justice filed a case. In this way, the government passively and quietly granted Wall Street immunity for designing and executing its $22-trillion dollar fraud. This grant of immunity drew little media attention. There was nothing to report. No sentences were commuted because no one had been sentenced. No crimes were pardoned because there were no convictions. However, the absence of news created a media void. Left to chance, filling it could get ugly. A crackdown was needed. Sensitive to the media’s need for a crackdown, but unwilling to conduct a real one, the government offered a substitute: a crackdown on hedge funds for insider trading.

So five years too late? Even though the evidence in the first referral shows Rubin lied, regardless of the media yelling for justice… is he too big to jail? Also, what about all of my evidence and testimony which was sent to the DOJ and which the FCIC also felt showed possible violations of law??

Phil Angelides, the former chairman of the FCIC says, “It’s been a disappointment to me and others that the Justice Department has not pursued the potential wrongdoing by individuals identified in the matters we referred to them. At the very least, they owe the American people the reassurance they conducted a thorough investigation of individuals who engaged in misconduct”

No, Mr. Angelides, the American people deserve justice.

P.S. Please send this on to everyone you know; include your banker and  Representatives. This impacts us all;  our pocket books and our democracy .