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Taibbi writes: "I love covering trials, which is one reason I've been a little sad since switching over to the Wall Street beat: Few of the bad guys in this world ever even get interviewed by the authorities, much less indicted, so trials are comically rare."

Matt Taibbi. (photo: Rolling Stone)
Matt Taibbi. (photo: Rolling Stone)

Another Batch of Wall Street Villains Freed on Technicality

By Matt Taibbi, Rolling Stone

05 December 13


love covering trials, which is one reason I've been a little sad since switching over to the Wall Street beat: Few of the bad guys in this world ever even get interviewed by the authorities, much less indicted, so trials are comically rare.

But we did have one last year, a big one, and though it was boring and jargon-laden enough on the surface that at least one juror fought sleep in its opening days, I thought it was fascinating. In a story about the Justice Department's Spring 2012 prosecution of a wide-raging municipal bond bid-rigging case, I called it the "first trial of the modern American mafia":

"Of course, you won't hear about the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that . . . But this just completed trial in downtown New York . . . allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street."

Dominick Carollo, Steven Goldberg and Peter Grimm were mid-level players who worked for GE Capital. They were involved in a wide-ranging scheme (one that also involved most of America's biggest banks, from Chase to BOA to Wachovia) to skim billions of dollars from America's cities and towns by rigging the auctions banks set up to help towns earn the highest returns on the management of municipal bond issues.

The case was over 10 years in the making and involved offenses that took place long before the 2008 crash. All three defendants were convicted in May 2012, with Goldberg ultimately getting four years and the other two getting three.

Now, they're all free. A New York federal judge last week ordered their convictions overturned in a quiet Thanksgiving-week transaction.

The GE Muni-riggers will now join such luminaries as the Gen Re defendants (executives from an insurance company who were convicted in 2008 of helping AIG conduct a fraudulent accounting transaction) and the KPMG defendants (executives of the U.S. arm of the Dutch accounting giant who were convicted in the 2000s of selling illegal tax shelters) in the ranks of Wall Street line-crossers who improbably made it all the way to guilty verdicts in criminal cases, only to be freed on technicalities later on.

As one antitrust lawyer I know put it: "Apparently, the government can't seem to get criminal trials involving financial executives (as opposed to, well, drug dealers) right. Go figure."

In this case, the defendants were shielded by the sheer complexity of the case. It would appear that the state took so long sorting through the mountains of recorded conversations and interviews to find the massive but well-camouflaged crime - these men, along with others like them in other banks, were using code words to rig the auction process so that banks and finance companies could collude and bid lower for city and town money management business - that the statute of limitations ran out on their own individual actions. When that happened, the Feds then switched up and charged them with different crimes related to what they claimed was an ongoing conspiracy, using continuing interest payments to establish the "ongoing" part of the indictment.

According to the lawyers for the three men, this allowed the government to unfairly bypass the statute of limitations. The lawyers for two of the men gave statements that recalled the heartwarming courthouse-steps speeches given by attorneys for genuine innocents, freed from prison after years of suffering by DNA results.

"We feel gratified by the Second Circuit's order, which allowed Steve Goldberg to be freed in time for Thanksgiving with his family," said David Frederick, Goldberg's attorney.

There are two important reasons why Wall Street defendants tend to slink out of convictions more easily than, say, drug dealers or burglars. Both reasons showed loudly in this case.

One is obvious. The Wall Street types have better lawyers. They don't miss anything and they all have gigantic balls (or are paid to have them, anyway). In this case, who knows, the court might even have been technically right in its decision. But it needed to be led there by lawyers with the skill to pull it off.

The argument in this case was relatively straightforward, as the government itself admitted it missed the deadline to charge the defendants based upon their own actions. But in the KPMG case, for instance, the court had to be convinced that an official Department of Justice policy for securing cooperation from corporate targets - one originally dreamed up by Eric Holder in the Clinton years, incidentally - was inherently violative of defendants' rights to counsel. That was a long bomb of a legal argument and in that case the KPMG lawyers hit the court right in the hands.

So unlike street-crime cases - where prosecutors screw up all the time but overworked defense counsel rarely have the time or the resources to call them on their mistakes - in these finance-sector cases, no error ever goes unnoticed.

It's one of the reasons prosecutors don't like to bring these cases at all. You make one misstep, and the whole case goes away - in this case, 10 years of work by God knows how many lawyers and investigators goes down the drain, with the snap of a finger. Imagine the last time you lost a paper thanks to a computer error, multiply that feeling by about 10 billion, and you might get close to grasping the horror of the DOJ prosecutors in this case this week.

The other reason these cases get overturned so much is equally obvious. These scandals are crazily complex. It's not just juries that have a hard time sorting them out. In many cases the crimes are so subtle, and the standard of proof to even call the crimes crimes is so high, that it takes years and years for investigators to build cases.

You can send a guy away for life on a murder charge based on a speck of blood and an old lady who saw a piece of a license number on a car screeching away from the scene. But you need to build a massive rhetorical case from scratch just to indict someone for being part of a nationwide bid-rigging conspiracy.

The crimes take place in a world unknown to ordinary people, so it is not unlike trying to explain a crime committed by aliens on another planet. In fact, the crime, in many cases, is not one that has even been seen in American courtroom before.

Judges need to be convinced they're not wasting their time. Juries need to be walked by the hand down a very deep rabbit-hole of inscrutable paper transactions and then literally trained on the fly to recognize evidence - these trials are often more like seminars than court cases.

So bringing these cases takes forever. This one took forever. And in the end, for these three anyway, it was all for nothing.

The Carollo, Goldberg and Grimm case was important on a number of levels. Many years from now, we will look back on this story that began as far back as the late Nineties and recognize in it an early, smaller-scale preview of the major global manipulation/collusion scandals that have already rocked the planet and will likely continue to do so in the years to come.

After all, the most dangerous possible consequence of the extreme concentration of financial power that has taken place in the last few decades has always been the possibility that these giants might figure out ways to work together, to game the costs of things for the rest of us. That's what took place in this case, as these defendants (and many big banks which have already settled with the state for similar actions) were caught colluding to skim from the investment returns owed to all of us local taxpayers.

Something similar also took place in the Libor case, and in the global currency exchange scandal now blowing up, and in numerous other manipulation cases (involving everything from metals to chocolate) already coming down the pipeline.

All of these cases will share the same features. The defendants, if there will be any, will have the best lawyers money can buy. And if they're charged at all, it will be for the most complex crimes imaginable, offenses so convoluted that it will take years to make cases.

This carries serious risks for anyone trying for justice, and we've just seen what those risks are. It's hard to put these guys away. It's even harder to keep them there. your social media marketing partner


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+70 # zornorff 2013-12-05 09:55
If the government really wanted these guys they could get them by Rico, the tried and true way of getting the mob. The sad truth is that there is too much money flowing from crooks to politicians of both parties for the govt to really want to prosecute.
+13 # Joe Bob 2013-12-05 18:22
Hear Ye, Hear Ye
+6 # slimguysf53 2013-12-07 09:26
Torches & pitchforks marching on Washington. Turn them all out. Strict term limits, perhaps even SCOTUS justices.
+1 # RobertMStahl 2013-12-08 16:23
This is what being a step in time is? Saul Bellow was murdered after writing about this apologetic human behavior in 1997, More Die of Heartbreak. A leap in learning across the board, pun intended, was what he said was needed in lieu of this stepping up to the modern landscape of change, hardly progress. One cannot make any steps at all, not in the context of Bateson.
+3 # Rita Walpole Ague 2013-12-09 05:52
Hit the evil nail on the head you did, zornorff, with your truth plus comment. Rule of law, in the toilet.

And, Matt Taibbi, I certainly relate to your love of covering trials. Reason that I, the old journalist who drifted into admin. law (via getting begged for legal assistance for the disabled and their families, pleas I could not ignore), could not refuse getting onboard the plaintiff's legal team in Hedges, et. al. v. Obama, et. al., a so needed (but little covered in today's 'mess' media) effort to restore and protect free speech/free press rights.

Fight to restore fundamental constitutional rights we must, along with pulling folks out of La La Land, and waking them up to painful reality of the greed and power over all staph infection of our villainaire actual rulers and their bought off pol. puppet clowns who wear both G.O.P. and Dem. labels.

Keep up your so needed truth telling and outing, Matt Taibbi.
+54 # fredboy 2013-12-05 10:31
American justice is now and has long been for sale to the highest bidder. Sad but true. Threats also steer judicial decisions.

As you say, this is the new mafia. That's how it works.
+3 # AMLLLLL 2013-12-06 10:04
In this way America is truly not exceptional. We talk the talk but walk? Not so much.
+26 # wantrealdemocracy 2013-12-05 11:29
We can put these bastards out of business if we SHUT DOWN THE FEDERAL RESERVE and form public non profit banks in each state.

The treasury dept. and the Congress can take care of inter state banking. Each of these public banks must be under regular audits by a governmental agency.
+24 # Craig Jones 2013-12-05 11:40
"Statute of Limitations" there's the culprit and it is time to rescind that time limit for any crime.
+6 # Kootenay Coyote 2013-12-05 12:00
Eick: “... those direct generation customers are essentially freeriders on the system. They are not paying for the infrastructure they are using.” This is the excuse for a mad tax on green energy. Please note the utter lack of logic or fact in the argument:
1. The customers in question have already paid for their grid connection.
2. Their power delivery reduces generation & maintenance costs for the corporations they benefit.
3. The State does NOT own the Sun.
4. & ALEC policies attack society & are thus treasonous.
+18 # Kootenay Coyote 2013-12-05 12:07
oops -wrong webpage, sorry twice over....

& re this article:

When & where justice is impossible, violence takes its place. Wait & see....
+15 # JSRaleigh 2013-12-05 15:22
Quoting Kootenay Coyote:
oops -wrong webpage, sorry twice over....

& re this article:

When & where justice is impossible, violence takes its place. Wait & see....

Two things to keep in mind:

1. The corporate mercenaries have most of the guns.

2. Whenever you gather with like minded friends to plan how you're going "peaceably to assemble, and to petition the Government for a redress of grievances" - that guy who wants you to blow something up "to get THEIR attention" or "to send THEM a message" ... he's the FBI's informant in your group.
+6 # Marieke 2013-12-05 17:02
#2 is a good point!
+10 # jwb110 2013-12-05 12:23
Maybe use the NSA to front load discovery in the crimes of the future.
+20 # slocan 2013-12-05 12:30
It becomes increasingly clear that the only way to change all of this will be a revolutionary change in our political, financial structures. I personally see that revolution as unlikely to come from humanity. However, given the rate of change towards ecological collapse it seems that nature will do it for us. The elite may last longer having , money, power and security but they too will eventually succumb. I'm not sure that's a relief given what we lose.
+20 # The Skeptical Cynic 2013-12-05 12:31
What compounds this situation is that these lizards walk, their lawyers "earn" mega millions which are then considered "business expenses" for tax exemption purposes.
Prosecuting banksters and corporateering lizard people who can hire scruples challenged Gucci shod goons with brief cases (instead of "violin cases" of the 1930s) has long been a losing proposition for the public. Decades ago, in a case in which U.S. appliance manufacturers were convicted of a price fixing scheme (screwing the public)and had to pay fines of treble damages (punitive)... the fines were determined by the tax court to be legitimate business expenses and thus written off so who made up the difference? John Q. Public.
+6 # PaineRad 2013-12-05 14:25
At the very least, the SoL on financial crimes ought to be increased and a surtax on the FIRE sector charged to pay for more staff.

It also would be a good idea to make sure that the crimes are ongoing so that the SoL doesn't kick in so soon. I'm a little surprised that the fixing is not still ongoing. Everything else these banksters have done, they seem still to be doing.
+10 # MidwesTom 2013-12-05 15:14
My favorite saying "HOW MUCH JUSTICE CAN YOU AFFORD?". The poster child is Wall Street.
+1 # DPM 2013-12-05 16:40
0 # Marieke 2013-12-05 17:03
+13 # mgwmgw 2013-12-05 17:30
To begin with move all your money out of the big banks. Bank at small banks or, if you have them locally, credit unions. If enough people did, it would matter.
0 # pres 2013-12-05 19:36
The taxpayers 'holding accounts' should only be permitted to buy US T-bills until they are due... not 'invested' in Wall St gambling of the taxpayers funds.
+3 # Working Class 2013-12-05 22:03
I sure it has nothing to do with the Attorney General old job working for a White Shoes law firm that specialized in defending Wall Street Firms. Na, that couldn't be it. Or his chief criminal prosecutor also working for that same firm prior to working for the AG. Of course that guy left government - give ya three guesses who he is working for again.
+4 # Texas Aggie 2013-12-06 00:47
Holder managed to get a conviction. It was a federal judge who voided it. It's kind of difficult to blame Holder for this, and even Taibbi isn't suggesting that there was any problem with the prosecution case, only that it took so long since it started before Holder was ever nominated for Attorney General.
+10 # Texas Aggie 2013-12-06 00:43
One positive benefit is that the court case showed that these individuals were guilty. That means that cities that suffered because of their crimes can come after them in civil suits that don't have a statute of limitations.
0 # wleming 2013-12-06 21:03
its called capitalism
and its a kind of prism
thru which you can view
just how and why and where
the corprate state will screw you
and if you want redress
i must confess
theres nothing they can do
for you
0 # dbohj5l 2013-12-09 04:48
Surely to God the fact the three were fibbing for ten years counts as an offense of perjury?
Can you see anyone else getting away with that?(even presidents don't always)
Could we not demand a negotiated settlement because of their not doing business in a straightforward as possible manner, the way we all would prefer to see most finance, especially municipal bonds handled?
Seriously, folks, if even those in charge of so much within this system admit through wrongdoing that it does not meet their needs (notice how this piece-of-common -genius sentence applies to the defendants AND the prosecutor AND the judges) and the rest of us are hungry,apatheti c,enraged,or stupidly hopeful, then we can all afford to admit we need to start again.
Let's bring back medically-based individually assessed rationing till we work out a sustainable organic agricultural plan and work from there.
I can see us beginning to work things out really effectively when people have all their assets and all their bills frozen.
Name one big (necessary) corporation that can't afford to keep going while we do that?
Not yet covered Healthcare,war, well any real healer will work for the job being done for a while and no-one is going to see them harmed,folks if we all worked together we wouldn't be having this many wars now, would we?
Try telling this to people you know please: my gubernatorial campaign is a bit below budget ,I may have to rely on common sense and goodwill.God bless!

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