By Pam Martens: November 4, 2013
Nothing reveals the incestuous, one-percent-mindset that New York City Mayor Michael Bloomberg and Police Commissioner Raymond Kelly have with Wall Street than the next to last photo at this link. The photo shows an employee of U.S. Attorney General Eric Holder’s number one target for financial fraud investigations, JPMorgan Chase, working inside a high security spy center in Lower Manhattan to — wait for it — help the New York City Police Department catch crooks.
While most law enforcement bodies around the U.S. would instantly weed out serial wrongdoers as job hires, Bloomberg and Kelly have created an art form out of joint policing ventures with Wall Street, operating both a rent-a-cop program with Wall Street as well as pumping at least $150 million of taxpayer money into the Lower Manhattan Security Coordination Center where Wall Street employees sit elbow to elbow with NYPD officers.
Under some Orwellian concept of citizen surveillance, the very Wall Street banks that proved they were a far greater threat to the United States than any foreign terrorist when they collapsed the Nation’s financial system in 2008, are part of a joint venture with the NYPD to use high-tech spy equipment to monitor the comings and goings of citizens in the streets of Manhattan – the majority of which, unlike Wall Street, are law abiding citizens.
Last week, JPMorgan Chase revealed in a filing with the Securities and Exchange Commission that it is under eight separate investigations by the U.S. Department of Justice. Some of the investigations involve potentially criminal matters ranging from allegations of hiring well-connected family members to get business in Asia; turning a blind eye to fraudulent transactions that Bernard Madoff ran through his business bank account at JPMorgan; rigging the Libor interest rate index; manipulating energy trading markets; gambling in London with insured deposits (London Whale episode); to improper credit derivatives and mortgage bond sales.
One of the most serious crimes for which JPMorgan is under investigation is the decades-long Ponzi scheme perpetrated by Bernard Madoff, which stole $17 billion in actual cash from thousands of investors while producing account statements showing the fictitious portfolios had grown to $64 billion. The fraud left hundreds of families destitute or forced to move in with children.
Outside of Madoff and his employees, no one had a better birds-eye view of this operation than JPMorgan Chase, the bank where Madoff held his business bank account for 22 years. According to lawsuits filed by the Trustee handling the Madoff recovery funds, Irving Picard, JPMorgan knew that Madoff was engaged in an investment advisory business for a broad array of customers but the Madoff bank account that JPMorgan Chase oversaw never showed a payment going to clear or process a stock trade.
But the most damaging detail revealed by Picard is that JPMorgan put its suspicions in writing, not to U.S. regulators as it was required to under law, but to the United Kingdom.
On October 28, 2008, JPMorgan Chase sent a “suspicious activity report” to the U.K.’s Serious Organized Crime Agency (SOCA). The document reads:
JPMorgan’s “concerns around Madoff Securities are based (1) on the investment performance achieved by its funds which is so consistently and significantly ahead of its peers, year-on-year, even in the prevailing market conditions, as to appear too good to be true – meaning that it probably is; and (2) the lack of transparency around Madoff Securities’ trading techniques, the implementation of its investment strategy, and the identity of its OTC option counterparties; and (3) its unwillingness to provide helpful information. As a result, JPMCB has sent out redemption notices in respect of one fund, and is preparing similar notices for two more funds.”
Less than two months before Madoff revealed his fraud to the world, JPMorgan Chase sent notices to redeem the $250 million it had invested with Madoff.
In the Fall of 2011, I filed two Freedom of Information Law requests with the NYPD seeking details on the rent-a-cop program and the Lower Manhattan Security Coordination Center.
The Freedom of Information Law in New York State says that “The people’s right to know the process of governmental decision-making and to review the documents and statistics leading to determinations is basic to our society. Access to such information should not be thwarted by shrouding it with the cloak of secrecy or confidentiality. The legislature therefore declares that government is the public’s business and that the public, individually and collectively and represented by a free press, should have access to the records of government in accordance with the provisions of this article…”
Despite the legislative mandate that the NYPD should respond in 5 business days or a period reasonable to the request, both of my requests received a written response stating it would take five months to answer — five months or 30 times longer than the legislative intent. To date, I have not received a sliver of paper responsive to my request.
If we want to understand why Wall Street believes it is above the law, look no further than the NYPD.