Swamp Watch: Eric Holder and White Collar Crime
/Why do drug dealers go to prison while white collar criminals, even those who admit to laundering drug money, get off with a fine and a slap on the wrist?
Because an insular club of elite lawyers have corrupted our justice system. Eric Holder and his friends move between the Department of Justice and white collar criminal defense firms like Covington & Burling. They’re the reason bank executives who admit to committing crimes still get to avoid prison. And they’re the subject of this installment of Swamp Watch.
Adapted Transcript
Why do drug dealers go to prison while white collar criminals, even those who admit to laundering drug money, get off with a fine and an apology? Why wasn't a single senior banker prosecuted for their role in the financial crash? Why is it always one rule for the elite and a different rule for everyone else?
Because a corrupt Department of Justice has effectively decriminalized white collar crime. It's the subject of tonight's Swamp Watch.
The 2008 financial crash was the biggest economic disaster in modern history, causing years of pain for millions of working Americans, not to mention hundreds of billions of dollars in taxpayer bailouts for the big banks.
But despite that, and with new wall street scandals being exposed all the time, most recently at Wells Fargo, criminal prosecutions for financial fraud have been falling ever since the Clinton administration, and especially fast under President Obama.
In the 80s and 90s, during the savings and loan crisis, prosecutors convicted nearly 900 people, including the chief executives of several banks, who went to jail. The Enron scandal in 2001 led to executives Jeffrey skilling and Kenneth Lay both being convicted.
As Rudy Giuliani, the top federal prosecutor at the time, said back then, "The rules apply to mob big shots like 'Fat Tony Salerno' and they apply to big shots at Goldman Sachs too."
“The rules apply to mob big shots like ‘Fat Tony Salerno’ and they apply to big shots at Goldman Sachs too.”
They certainly should... But they don't anymore. So, what happened?
Well, Eric Holder happened.
In 1999, he wrote what has become known as the "Holder memo". At the time, he was the deputy attorney general and he issued a memorandum to all United States attorneys, informing them that when deciding whether to charge a corporation with a crime, they can...
"Take into account the possibly substantial consequences to a corporation's officers, directors, employees, and shareholders."
Let's be clear what that means. One rule for big corporations, where prosecution could have big consequences. And another for small businesses, who still have to face the full force of the law because the 'consequences' of their crimes are smaller.
The Holder Memo established a new, elitist doctrine: the bigger the crime, the less likely the time. Holder even admitted as much when he was President Obama's attorney general in 2013.
Eric Holder: "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute-- if we do bring a criminal charge-- it will have a negative impact on the national economy, perhaps even the world economy."
After the outcry that followed, he tried to walk that swampy statement back by saying, "Let me be very, very, very clear. Banks are not too big to jail."
Well, let me be very, very, very clear, Mr. Holder. You can say what the hell you like, but you're condemned by your own actions.
In 2012, British bank H.S.B.C admitted to laundering money for murderous Mexican drug cartels, financing terrorist groups, and helping Iran and North Korea evade U.S. sanctions. Remember, the bank admitted these crimes!
What was the punishment?
CEO Stuart Gulliver said he was sorry. In fact, he was "profoundly sorry". The bank paid a fine that amounted to around half its profits for three months. And not only is Gulliver still C.E.O., but H.S.B.C actually increased his salary to around 12 million dollars.
Here's another one. Goldman Sachs admitted to defrauding its investors, causing them to lose billions of dollars. Did any Goldman banksters go to jail?
Nope. They paid a fine and went right back to work
This is what the holder memo led to: instead of pressing criminal charges, prosecutors negotiate something called "Deferred prosecution agreements." Basically, the company acknowledges wrongdoing, pays a fine, and pledges to improve its corporate culture... But nobody is actually punished for the crime.
I could cite case-after-case of these deferred prosecution agreements. Between 2002 and 2016, the Department of Justice entered into more than 400 of them. Executives in large corporations now know that in America, whatever crimes they commit, the worst that's going to happen is a fine - a fine they don't even personally pay.
As one retiring S.E.C. Attorney put it, for the powerful elite, these fines are, "At most a tollbooth on the bankster turnpike."
“[Our fines are] at most a tollbooth on the bankster turnpike.”
As Jesse Eisinger, the author of the new book The Chickenshit Club, argues, this is a shocking corruption of our justice system. And at the heart of it is an insular club of elite lawyers who make their way multiple times through the revolving door between the Justice Department and elite law firms.
Case in point: In 2010, when the Senate recommended criminal prosecution for Goldman Sachs C.E.O. Lloyd Blankfein, he hired one of the nation's top white collar defense attorneys, Reid Weingarten. Conveniently, Weingarten is friends with Eric Holder, and his kids go school with Lanny Breuer's. Lanny Breuer was then head of the D.O.J.'s criminal division.
Holder and Breuer worked for years at the elite Washington law firm Covington & Burling, where they represented many of the banks responsible for the financial crisis, including Bank of America, Citigroup, and J.P. Morgan Chase.
Holder and Breuer then joined the Obama administration's Justice Department - where they helped out their friends defending the financial elite, making sure no-one, including Lloyd Blankfein, was prosecuted for the financial crash.
Now they're out of government - and back at Covington and Burling, back representing big corporations.
Except: did they ever stop representing big corporations?
Covington and Burling's millions in political donations - over two thirds of which went to Democrats in 2016 - just add to the stench of corruption attached to this swampy firm.
Lawyers are supposed to represent justice. In today's America, it's the exact opposite. Too many of them represent the perversion of justice.