Obama Administration propaganda on prosecuting elite financial frauds
By William K. Black
The Obama administration’s record of prosecuting elite financial frauds is worse than the Bush administration’s record, which is a very large statement. Syracuse University’s TRAC issued a report on November 11, 2011 entitled “Criminal Prosecutions for Financial Institution Fraud Continue to Fall.”
Neither administration has prosecuted any elite CEO for the epidemic of mortgage fraud that drove the ongoing crisis. This contrasts with over 1,000 elite felony convictions arising from the S&L debacle. The ongoing crisis caused losses more than 70 times greater than the S&L debacle and the amount of elite fraud driving this crisis is also vastly greater than during the S&L debacle. Bank CEOs leading “accounting control frauds” now do so with impunity from the criminal laws. They become wealthy through fraud and even if they are sued civilly they almost invariably walk away wealthy with the proceeds of their frauds.
The Obama Administration Prefers Politics and Propaganda to Prosecutions
Elite financial institutions officers engaged in fraud face a dramatically reduced risk of prosecution compared to 20 years ago when financial fraud was far less common. TRAC reports that the number of financial institution fraud prosecutions under Obama is less than one-half the number 20 years ago. Bush (II) was slightly better than Obama in prosecuting non-elite financial institution frauds, but both were pathetically bad.
The New York Times reported on January 23, 2012 that the administration rushed to try to reach a settlement with the five largest banks that engaged in massive foreclosure fraud so that it could take credit for it in the State of the Union (SOTU) address. The headline for the article was “Political Push Moves a Deal on Mortgages Inches Closer.” The administration did not deny the statements made in the article.
“But a final agreement remained out of reach Monday despite political pressure from the White House, which had been trying to have a deal in hand that President Obama could highlight in his State of the Union address Tuesday night.
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As a former Department of Justice attorney I regret the administration's bringing the department into disgrace. I can personally assure the nation that nothing like this ever occurred during the S&L debacle in our prosecutions, civil lawsuits,
Spokane Woman Indicted for $126 Million Payday Loan Ponzi ...
The Department of Justice charged a Washington woman with orchestrating a Ponzi scheme that took in more than $126 million from investors worldwide. Prosecutors filed a 110-count indictment against Doris "Dee" Nelson, accusing her of operating the scheme to support a payday lender known as Little Loan Shoppe. Nelson faces 71 counts of wire fraud, 22 counts of mail fraud and 17 counts of international money laundering, which could result in a prison sentence of hundreds, if not thousands, of years if she is convicted of the charges. The charges come several months after the SEC instituted civil proceedings against Nelson.
According to the indictment, Nelson used numerous different business entities to operate a payday/short-term lending business called the Little Loan Shoppe ("LLS"). Originally centered in British Colombia, LLS moved its operations to Spokane in or around 2001. Shortly after in 2003, LLS closed all physical operations and and began conducting the business over the internet. According to the indictment, the scheme began in or around May 2000, when Nelson began soliciting investors by promising high yields on investor funds which Nelson claimed would be paid from the profits of the short-term operations of LLS. These purported returns ranged from forty to sixty percent annually, and were often paid to investors via post-dated interest checks mailed to the investor at the time of their investment. When the operation began to encounter financial difficulties in October 2008, investors were offered reduced interest rate payments of ten percent. However, the financial difficulties continued, and by March 2009, Nelson had ceased making any payments.
While Nelson represented to investors that LLS generated huge profits that were used to pay the exorbitant returns, in reality the entire operation was a massive Ponzi scheme, with nearly all investor funds being used to pay interest to existing investors and to sustain Nelson's lavish lifestyle. Nelson alone received over $3 million in funds diverted from investor funds, which were used to purchase, among other things, a motor home, a Chevrolet Corvette, and a Mercedes Benz S550. Additionally, Nelson used investor funds to gamble at Las Vegas casinos, losing nearly $500,000 between 2005 and 2008. Nelson also paid commissions to several investors in return for directing further investment to Nelson's operation.