If it bends, it’s funny.

December 9, 2010 9:10 AM

Monday, December 6, 2010: WASHINGTON— “Attorney General Eric Holder announced today the results of Operation Broken Trust, a nationwide operation organized by the Financial Fraud Enforcement Task Force to target investment fraud. To date, the operation has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes that harmed more than 120,000 victims throughout the country. The operation’s criminal cases involved more than $8.3 billion in estimated losses and the civil cases involved estimated losses of more than $2.1 billion. Operation Broken Trust is the first national operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.” —Or, well, maybe, perhaps, not so much.

Ryan Chittum at the Columbia Journalism Review summarizes the findings of a couple of reporters who’ve spent the past few days digging into these claims:

“The New York Times’s Andrew Ross Sorkin called out Eric Holder’s Justice Department on Monday, noting that the 343 criminal defendants it said it’s prosecuting in a sweep it lamely calls Operation Broken Trust are small fry. No executive from the major corporations (like, oh, AIG, Lehman Brothers, Washington Mutual, Countrywide, Ameriquest, etc.) has yet been charged.

“[Shawn J.] Chen [a partner in the Washington office of Cleary Gottlieb Steen & Hamilton] went so far as to suggest that the number of cases Mr. Holder cited as evidence of the department’s crackdown were somewhat fictional.

“‘It’s hard to believe that they built up all these cases in the past four months,’ since the task force was created, Mr. Chen said, suggesting it was more likely that Mr. Holder counted every case that had anything to do with financial fraud and put them all under the Operation Broken Trust umbrella.”

And also:

“Bloomberg’s Jonathan Weil comes along today with an outstanding column further proving that the feds are full of it...

“The statistics looked squirrely on their face. Some of these cases began years ago, long before the multiagency task force was formed. It’s obvious what the prosecutors did here, too. First they tracked down every small-fry Ponzi scheme, affinity fraud and penny-stock pump-and-dump they could find that had advanced through the courts since mid-August. Then they totaled them up and called it a sweep, lumping together cases that had nothing to do with each other[...]

“For instance, the list said a fellow named Lorenzo Altadonna had been convicted in the Western District of New York on Oct. 27. Actually, he was sentenced to three years probation on Aug. 5, court records show. That was 11 days before Operation Broken Trust began, which means the task force shouldn’t have counted him in its results, even by its own loopy methodology. Finelli said Altadonna was included mistakenly.

“The first page of the list also showed a Nov. 8 federal conviction in New Jersey of a man whom I won’t name here. There was no record for him on Pacer, which is the government’s online database of federal court proceedings. But I did find an Oct. 13 article in the Daily Record of Parsippany, New Jersey, about a fraud at an insurance agency where a person with the same name had worked. The article said he had not been charged criminally. Finelli declined to comment on why he was included in the task force’s list of defendants.”

posted by kipmanley (24 comments total)

"...the 343 criminal defendants it said it’s prosecuting in a sweep it lamely calls Operation Broken Trust are small fry."

Well, no shit. The big fish are called "corporations" and they're immune because they own the government.
posted by Mayor Curley at 9:15 AM on December 9, 2010 [6 favorites]

The big fish often have the resource to create new financial instruments that haven't been made illegal yet. Yeah, we should prosecute for actual crimes, but some things you have to chalk up to a failure to regulate adequately and move on.
posted by BrotherCaine at 9:24 AM on December 9, 2010

Good to see this Operation Few Bad Apples is stronger than ever
posted by victors at 9:24 AM on December 9, 2010 [6 favorites]

The issue isn't just that Obama's justice department isn't prosecuting the 'whales,' it's that the entire effort is a sham and a PR stunt. They didn't even go after small fry; instead they appear to have just grabbed every case that was in the Federal system (and some that weren't) related to financial fraud, tossed them into a list, and unrolled the Mission Accomplished banner.
posted by Kadin2048 at 9:29 AM on December 9, 2010 [9 favorites]

Julian Assange's statement that wikileaks next release will reveal an ecosystem of corruption in a major U.S. bank has them scared shitless, especially after they just spent so much saving those banks. So now they are making mistakes, first by having Assange arrested, and now by this half assed attempt to pretend they're on the ball while blaming a few bad apples.
posted by jeffburdges at 9:29 AM on December 9, 2010 [24 favorites]

@jeffburdges [multiple likes]
posted by mecran01 at 9:30 AM on December 9, 2010

Operation Large Fry has identified several thousand individuals who massively benefited from illegal activity during the Financial meltdown, and is in the process of extending tax breaks to them.
posted by benzenedream at 9:31 AM on December 9, 2010 [36 favorites]

I'm so fed up with the government, i could scream to be honest. I'm pretty sure I'll not be donating time or money to a candidate again.
posted by empath at 9:31 AM on December 9, 2010 [2 favorites]

This "look as if you're accomplishing something while secretly defending the status quo" thing seems to be a theme with this administration.

Something to keep in mind when Petraeus' Afghanistan review comes in.
posted by Joe Beese at 9:31 AM on December 9, 2010 [6 favorites]

On the plus side, it makes the journalists look better than the Assange story does.
posted by briank at 9:32 AM on December 9, 2010

Dam it Joe, this thread is about the Justice Department not the DoD what relevence does your link have....oh 'something to keep in mind.'
posted by clavdivs at 9:41 AM on December 9, 2010

Let's contextualize this a bit. Both Sorkin and Weil depend on financial services industry for their livlihood, its not just their main audience, its also where their sources work. (Sorkin especially is conflicted). Operation Broken Trust is a sham, but part of why Sorkin et al are so keen to attack the AG is because of the tangentially related insider trading investigations going on out there. Justice is desperately, almost pathetically trying to nail SAC, and its principal, Stevie Cohen, as well as the who ecosystem of related and similar hedge funds. If they were successful in doing that it is a really really big deal for Wall Street, especially the big broker-dealers (whom seem to have bought Sorkin), Those funds are the largest equity accounts on the street by a big margin, and their prime brokerage is a big contributor to earnings as well. It would be bad for everyone but the lawyers. Additionally if you are of the line of thinking that these funds are cheating (and I am, but that's neither here nor there) then there is going to be a big ripple effect as all of these fabulous profitable busiensses (both for those who work for them, and those who service them).

I'd also note that I am reasonably confident that SAC is a large Cleary client - but I fear that might be getting conspiracy theory-ish. If it was Schulte though I'd just laugh

http://www.bloomberg.com/news/2010-11-26/what-to-do-when-the-fbi-raids-your-hedge-fund-commentary-by-jonathan-weil.html

http://dealbook.nytimes.com/2010/11/29/just-tidbits-or-material-facts-for-insider-trading/
posted by JPD at 9:49 AM on December 9, 2010 [6 favorites]

ETA: Sorkin trying to pitch insiders feeding investors tidbits through expert networks and arguing it is mosaic theory is just fucking laughable. Non-materiality is the very essence of mosaic theory.
posted by JPD at 9:54 AM on December 9, 2010

Surely this...wait, wrong preznit.
posted by Mental Wimp at 9:54 AM on December 9, 2010

maybe the Obama administration’s laughable attempt to show it’s tough on financial fraud will cause enough of a backlash in the press that it forces them to actually do something

You mean, the press will stand up to the power structure and something will actually happen? Why am I skeptical?
posted by Obscure Reference at 9:57 AM on December 9, 2010 [1 favorite]

Yeah. What JPD said... But as I understand it, this "Operation Broken Trust" is only part of the picture. Aren't there a number of other pending investigations into financial system fraud related matters, both large and small scale? I mean, yes, it's possible these other cases will all amount to nothing, too, given Holder's seemingly reluctant grip on the reins over at the DOJ, but it's not exactly fair or sensible to focus exclusively on this one anti-fraud initiative to the exclusion of attention to those other ongoing concerns. My understanding is there's still some possibility of frying bigger fish in the financial fiasco as well, though it's admittedly doubtful we'll ever get to see justice fully served in these matters.
posted by saulgoodman at 10:01 AM on December 9, 2010

I'm a huge Obama fanboy, but this is pretty much bullshit. Good catch journalism!
posted by Potomac Avenue at 10:33 AM on December 9, 2010 [1 favorite]

Sometimes, when I visit Metafilter, I'm filled with joy over the many neat and interesting links here.

Other times, I find under the bed with my pet rabbit and shotgun, for fear of all the doom and gloom found here.
posted by nomadicink at 10:34 AM on December 9, 2010 [1 favorite]

The Obama Administration: The entire effort is a sham and a PR stunt

I've never done of the tagline things before, am I doing it right?
posted by hincandenza at 10:54 AM on December 9, 2010 [4 favorites]

I've never done of the tagline things before, am I doing it right?

Nailed it.
posted by T.D. Strange at 10:58 AM on December 9, 2010

The Obama Administration: The entire effort is a sham and a PR stunt

I've never done of the tagline things before, am I doing it right?

So very right.
posted by Joe Beese at 11:12 AM on December 9, 2010

'If it bends, it’s funny.'
no offense to the OP.
posted by clavdivs at 12:00 PM on December 9, 2010

I'm calling this "the politics of ossification".
posted by telstar at 1:38 PM on December 9, 2010

Paging BobbyVan. Or Ironmouth, or dougrayrankin - c'mon, somebody show me how there isn't really a class of wealthy oligarchs recklessly looting the public and private institutions of this country, with no fear of repercussions from the legal system because they own it too.
posted by Marla Singer at 7:00 PM on December 9, 2010