The U.S. Department of Justice (DOJ) has treated mortgage fraud cases as a low priority, even though President Barack Obama promised to crack down on such crimes in the wake of the 2008 financial crisis.
DOJ also greatly exaggerated its success in prosecuting mortgage fraud, according to an investigation by the department’s Office of the Inspector General (IG).
Attorney General Eric Holder Jr. declared four years ago that mortgage fraud crimes had “reached crisis proportions,” and promised his agency would be “fighting back” in response.
But the IG’s report (pdf) shows the Federal Bureau of Investigation (FBI) put mortgage fraud at the bottom of its criminal priority list—after receiving extra funding ($196 million from the 2009 to 2011) to address this problem. In some major cities, mortgage fraud wasn’t even on the FBI’s radar as any kind of a priority.
“Despite receiving significant additional funding from Congress to pursue mortgage fraud cases, the FBI in adding new staff did not always use these new positions to exclusively investigate mortgage fraud,” the report states.
A “significant backlog of unaddressed and pending mortgage fraud investigations” was disclosed by supervisors interviewed by IG investigators. In fact, important fraud cases were completely shut down by the FBI, not due to a lack of resources, but because the Bureau’s resources were diverted to other operations that were given higher priority, according to the report.
Just as disturbing was the fact that Justice inflated its numbers to make it appear prosecutors were doing more than they actually were.
In 2012, Holder announced his lawyers had charged 530 people during the previous year with mortgage fraud that had cost homeowners more than $1 billion.
In truth, the numbers were more like 107 people charged in cases totaling only $95 million, the IG found. Even after the figures were proven to be incorrect, the DOJ continued to cite the false statistics for nearly a year.
“The inspector general’s report sheds light on what looks like an attempt by the Justice Department to pull the wool over the public’s eyes with respect to its efforts to go after the wrongdoers involved in mortgage fraud,” Senator Charles Grassley (R-Iowa), the ranking member on the Senate Judiciary Committee, said in a statement. “According to the inspector general, the department wasted time cooking the numbers about the cases it pursued, when it should have been prosecuting cases.”
The IG offered numerous recommendations to the department, most of which involved fixes to DOJ’s recordkeeping system that had produced such inaccurate figures.
The Justice Department objected to the IG’s conclusions, citing prosecutors doubling the number of mortgage fraud indictments from 2009 to 2011.
“The facts regarding the department’s work on mortgage fraud tell a much different story than this report,” Ellen Canale, a department spokeswoman, told The New York Times. “As the report itself notes, even at a time of constrained budget resources, the department has dedicated significant manpower and funding to combating mortgage fraud.”
Mortgage fraud—through falsification of documents by lenders and brokers—was one of the catalysts of the 2008 financial collapse. Fraud involving mortgage-backed securities, said to be larger in scope and also a contributing factor to the collapse, is considered by the FBI to be securities fraud and was not addressed by the IG report.
To Learn More:
U.S. Criticized for Lack of Action on Mortgage Fraud (by Matt Apuzzo, New York Times)
Mortgage Fraud Efforts Fell Short, Justice Department Inspector General Concludes (by Jeffrey Benzing, Main Justice)
Audit of the Department of Justice’s Efforts to Address Mortgage Fraud (U.S. Department of Justice, Inspector General) (pdf)
Justice Dept. Sues Bank of America over Prime Mortgage Fraud (by Noel Brinkerhoff, AllGov)
Big Banks Slither out of Mortgage Fraud Review with Minor Costs (by Noel Brinkerhoff, AllGov)
The “most transparent administration” received another win for continued secrecy, thanks to an appeals court decision that allowed it to continue to withhold a DOJ memo that created an exploitable loophole in consumer data privacy protections.
The document at issue is a classified memo issued by the Office of Legal Counsel on Jan. 8, 2010. A report later that year by the Justice Department’s inspector general at the time, Glenn A. Fine, disclosed the memo’s existence and its broad conclusion that telephone companies may voluntarily provide records to the government “without legal process or a qualifying emergency,” notwithstanding the Electronic Communications Privacy Act.
The EFF has been engaged with the government over the release of this document since 2011, when a district court judge ruled the document was exempt from FOIA requests because it was part of executive branch “internal deliberations.” In other words, despite the fact that the OLC memos can be considered legally binding (and exempt those following the memos’ advice or instructions from legal repercussions), the memo is not considered “working law.” The EFF has argued that these memos are not “deliberative,” but are rather secret laws deployed in such a fashion as to avoid being exposed by FOIA requests.
The presiding judge explained his decision with this reasoning.
“Even if the O.L.C. opinion describes the legal parameters of what the F.B.I. is permitted to do, it does not state or determine the F.B.I.’s policy,” Judge Harry T. Edwards wrote in the decision on Friday. “The F.B.I. was free to decline to adopt the investigative tactics deemed legally permissible in the O.L.C. opinion.”
According to the FBI, it did decline to follow the memo’s parameters.
The bureau, which has abandoned exigent letters, said that it did not employ the legal theory outlined in the memo when using the letters, and that it had no plans to use it in the future.
But the DOJ’s arguments for keeping the memo secret calls the FBI’s assertion into question.
During the litigation, the Justice Department also told the court that parts of the memo contained classified information, “highly specific in nature and known to very few individuals,” about a secret intelligence-gathering technique that the F.B.I. is using against “hostile entities.”
Either the FBI is utilizing the memo’s legal theories or the memo covers so much ground that the FBI is using something entirely unrelated, making the first statement truthful as far as it extends to exigent letters only.
Judge Edwards’ rationale gives the government every reason to utilize the Office of Legal Counsel to provide it with the legal justification it needs to deploy questionable tactics and programs. (Previous OLC memos were used to justify warrantless wiretaps and “brutal questioning of detainees.”) The ruling makes it easier for any OLC memo to be exempted from FOIA requests, providing for even more government secrecy.
David Sobel, a lawyer for the EFF, called the ruling “troubling,” describing the office’s memos as a body of “secret law” that the public has a right to know about. He said he hoped the ruling would reinvigorate efforts among some lawmakers to enact a law opening such memos to greater scrutiny outside the executive branch.
“It’s kind of hard to imagine how a different case in the D.C. Circuit is likely to have a different outcome in light of this opinion,” he said.
Because the document remains a secret, its true significance remains a source of speculation. The New York Times says the memo is most likely the legal basis for the CIA’s voluntary agreement with AT&T, which allows the agency to search its massive database of international calls (and tip local numbers to the FBI for further investigation). And it’s not as if this secret memo is the only tool the government has for demanding data. The FBI may have abandoned “exigent letters” but it’s still using National Security Letters to obtain data without a court order. (No mention is made of the FBI’s exigent Post-It notes or over-the-shoulder database searches.)
The DOJ is understandably pleased with this decision as it plays to its obfuscatory tendencies. This is also a dubious win for this administration — and those that follow. Having an in-house agency on tap that can create new laws and interpretations of existing statutes without having to risk having its legally-binding memos scrutinized by the public will be a tool too powerful for many to ignore.
Since December 16, major business media have failed to dig deeper into a potentially blockbuster story involving the Justice Department’s refusal to honor a Wall Street regulator’s request for a subpoena against JPMorgan Chase to obtain Madoff related documents the firm was refusing to turn over. JPMorgan Chase was Madoff’s banker for the last 22 years of his fraud. The Trustee in charge of recovering funds for Madoff’s victims, Irving Picard, said in a filing to the U.S. Supreme Court this Fall that JPMorgan stood “at the very center of Madoff’s fraud for over 20 years.”
It’s a big story when a serial miscreant like JPMorgan – which has promised its regulators to change its jaded ways in exchange for settlements – risks obstruction of justice charges by denying one of its key regulators internal documents. It becomes an explosive story when the Justice Department, the highest law enforcement agency in the land and the regulator’s only source of help in enforcing a subpoena for the documents, sides with the serial miscreant instead of the regulator.
The story began on December 16 when Scott Cohn of CNBC posted a story with this headline: “Feds Probe JPMorgan Interference in Madoff Case.” The article revealed that the Office of the Comptroller of the Currency (OCC), a JPMorgan Chase regulator and part of the U.S. Treasury Department, had been so riled by JPMorgan’s refusal to turn over documents related to what its employees knew about the Madoff fraud that it referred the matter to the Treasury Department’s Inspector General.
The article quotes Richard Delmar, legal counsel to the Inspector General, who explains that “This office was looking into allegations made by JPMC’s regulator, the Office of the Comptroller of the Currency (OCC) that its oversight of the bank was being impeded, specifically with respect to the bank’s provision of banking services to Madoff.”
The Inspector General’s office clearly believed there was merit to the OCC’s claim because it issued its own administrative subpoena for the documents, according to the CNBC story. JPMorgan refused that request as well, leading the Inspector General to ask the Justice Department to enforce the subpoena – a request it refused to honor.
When the Justice Department refused to enforce this subpoena, it went against not one, or two, but three sets of investigators who had found a serious basis for suspecting JPMorgan of wrongdoing in the Madoff fraud.
Irving Picard, the Madoff victims’ fund trustee, had already filed a lower court lawsuit mapping out his case against JPMorgan. Picard told the court:
“Evidence of Madoff’s fraud permeated every facet of JPMC [JPMorgan Chase]. It ran from the Broker/Dealer Group, where BLMIS [Bernard L. Madoff Investment Securities LLC] maintained a bank account that no one honestly could have believed was serving any legitimate purpose, to Equity Exotics, where JPMC learned of the red flags inherent in BLMIS’s investment strategy, to JPMC’s London office, which learned that individuals might be laundering money through BLMIS feeder funds, to the Private Bank, which maintained intimate relationships with one of BLMIS’s largest customers, to Treasury & Security Services, which was responsible for investing the balance of the 703 Account in short-term securities.”
In a more recent filing with the U.S. Supreme Court seeking to overturn lower court findings that he lacked standing to sue JPMorgan and other banks, Picard further detailed his case against JPMorgan, explaining that JPMorgan was well aware that Madoff was claiming to invest tens of billions of dollars in a strategy that involved buying large cap stocks in the Standard and Poor’s 500 index while simultaneously hedging with options. But the Madoff firm’s primary bank account at JPMorgan, which the bank had intimate access to review for over 20 years, was devoid of evidence of stock or options trading.
Picard’s petition to the Supreme Court reads: “As JPM [JPMorgan] was well aware, billions of dollars flowed from customers into the 703 account, without being segregated in any fashion. Billions flowed out, some to customers and others to Madoff’s friends in suspicious and repetitive round-trip transactions. But in the 22 years that JPM maintained the 703 account, there was not a single check or wire to a clearing house, securities exchange, or anyone who might be connected with the purchase of securities. All the while, JPM knew that Madoff was using the account to run an investment advisory business with thousands of customers and billions under management and knew that Madoff was using its name to lend legitimacy to his enterprise…”
Picard also informed the Court that employees inside JPMorgan were well aware of the suspicions surrounding Madoff. JPMorgan’s Chief Risk Officer, John Hogan, had warned his colleagues 18 months prior to Madoff’s confession of his Ponzi scheme that “there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a ponzi scheme.”
Rather than reporting their concerns to the Justice Department, according to Picard, JPMorgan invested over $250 million of its own money with Madoff feeder funds while it simultaneously created structured investment products that allowed its own investors to make leveraged bets on the returns of the feeder funds invested with Madoff.
In September 2008, just two months before Madoff would confess to running an unprecedented fraud that bilked investors out of over $17 billion in real money and $65 billion in assets shown on customer statements, JPMorgan conducted a new round of due diligence and decided it was time to get out of its $250 million investment involving the feeder funds to Madoff.
One week ago, David Cay Johnston picked up on the subpeona story for Newsweek, writing: “Bernard Madoff’s principal bank, JPMorgan Chase, has for years obstructed federal bank examiners trying to ascertain what it knew about his gigantic Ponzi scheme, an official document obtained by Newsweek shows.”
Johnston cited an internal document he had obtained from the Government Attic, a public interest website that posts documents it obtains from Freedom of Information Act requests. Johnston said that “The JPMorgan memos Justice declined to pursue are almost certain to show that years earlier the bank had grounds to suspect Madoff was running a fraud.”
The most critical aspect of this subpoena story has thus far been overlooked. It may well be that there is an official position at the U.S. Department of Justice not to issue any subpoenas against the largest Wall Street firms.
On January 22 of this year, the award-winning producer, Martin Smith, aired a Frontline program for PBS titled “The Untouchables.” Smith had this to say on air:
“We spoke to a couple of sources from within the Criminal Division, and they reported that when it came to Wall Street, there were no investigations going on. There were no subpoenas, no document reviews, no wiretaps.”
One day after that program aired, the Washington Post reported that Lanny Breuer, head of the Criminal Division of the U.S. Department of Justice was stepping down from his post.
Now it would appear that the Justice Department’s problem of quashing subpoenas against Wall Street did not end with the departure of Lanny Breuer.
By Charles Shaw | October 28, 2013
500 innocent Americans are murdered by police every year (USDOJ). 5,000 since 9/11, equal to the number of US soldiers lost in Iraq.
In 1994 the US Government passed a law authorizing the Pentagon to donate surplus Cold War era military equipment to local police departments.
In the 20 years since, weaponry designed for use on a foreign battlefield, has been handed over for use on American streets… against American citizens.
The “War on Drugs” and the “War on Terror” replaced the Cold War with billions in funding and dozens of laws geared towards this new “war” against its own citizens.
This militarization of the police force has created what is being called an “epidemic of police brutality” sweeping the nation.
a short film by Charles Shaw
featuring the track ‘RELEASE” by Random Rab
and excerpts from the films
“THE EXILE NATION PROJECT” by Charles Shaw
& “NO JUSTICE , NO PEACE” by Krissana Limlamai & Brett Huff
P.A.T.R.I.O.T. Act I, II & III (2001, 2004, 2010)
Homeland Security Act (2002)
Enhanced Border Security, Visa Entry Reform and
Immigrant Deportation Act (2002)
The Intelligence Reform and Terrorism Prevention
Military Commissions Act (2006, 2009)
The FISA Amendments Act (2008)
The National Defense Authorization Act (NDAA)
The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is in trouble again, this time for losing more than 400 million cigarettes.
ATF agents failed to properly account for 2.1 million cartons containing 420 million cigarettes as part of the agency’s undercover operations, according to the Department of Justice’s Office of the Inspector General (IG). The missing cartons had a retail value of $127 million.
The IG’s office also reported that ATF paid an informant more than $4.9 million without requiring him to account for his expenses.
“We found a significant lack of oversight and controls to ensure that cash, cigarettes, equipment and other assets used…were accurately tracked, properly safeguarded and protected from misuse,” IG Michael E. Horowitz said in his report (pdf).
The mistakes were discovered after the inspector general’s office reviewed 20 undercover operations targeting cigarette smugglers that generated $162 million in income for ATF over a five-year period.
Like the Federal Bureau of Investigation and the Drug Enforcement Administration, ATF is allowed under the law to use proceeds generated from certain investigations to make up for gaps in the agency’s budget.
When asked about the millions of missing cigarettes, ATF spokeswoman Ginger Colbrun told The Washington Post that the inspector general’s numbers were wrong. Colbrun insisted only 447,218 cartons were unaccounted for, not 2.1 million, after ATF conducted its own internal probe of the matter.
ATF has been under fire during the past few years for having lost more than 2,000 guns that it used as part of a Mexican drug cartel sting operation called “Fast and Furious.”
To Learn More:
ATF Lost Track of 2.1 Million Cartons of Cigarettes in Sting Operations, Report Finds (by Sari Horwitz, Washington Post)
ATF ‘Lost 420m Cigarettes’ in Churning Investigations (BBC News)
Audit of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ Use of Income-Generating, Undercover Operations (U.S. Department of Justice, Office of the Inspector General, Audit Division) (pdf)
Is This the Most Bungled ATF Sting Operation Ever? (by Noel Brinkerhoff, AllGov)
ATF Program Let Hundreds of Guns go to Drug Cartels (by Noel Brinkerhoff, AllGov)
Largest Seizure of Illegal Cigarettes in History (by Noel Brinkerhoff, AllGov)
The FBI has reviewed thousands of criminal cases and suspects that 27 death penalty convictions may have been secured by using faulty and exaggerated testimonies that may have wrongfully linked defendants to crimes.
A joint review by the Federal Bureau of Investigation and the Justice Department was launched after the Washington Post last year reported that flawed forensic work by FBI hair examiners might have led to the convictions of innocent people. The article suggested that Justice Department officials knew of the flaws, but failed to acknowledge them.
Last July, federal officials announced that they would investigate old criminal cases to see if faulty testimonies influenced death penalty convictions. More than 21,700 FBI Laboratory files are being examined, and at least 120 convictions have already been identified as potentially suspicious. Of these, about 27 were death penalty convictions, the Post reports.
Investigators suspect that these convictions may have been influenced by FBI hair examiners who exaggerated the significance of their findings. These experts linked defendants to crimes based on “matches” from microscopic analysis of hair found at crime scenes. Many of these experts claimed that their hair analysis tests definitively confirmed the identity of the offender.
But such statements were often misleading: since the 1970s, FBI reports have usually stated that hair tests are not adequate proof to link a suspect to a crime, since these tests can be flawed.
In cases where solely a hair analysis led to a suspect’s conviction, US courts may have mistakenly locked up innocent people – or in some cases, sentenced them to death.
“One of the things good scientists do is question their assumptions,” David Christian Hassell, director of the FBI Laboratory, told the Post. “No matter what the field, what the discipline, those questions should be up for debate. That’s as true in forensics as anything else.”
The federal review of convictions has raised awareness about the problems that hair tests can pose when there is no other evidence to prove a suspect’s guilt. Texas executes more inmates than any other US state, and its Forensic Science Commission on Friday decided to scrutinize hair cases at all labs under its jurisdiction.
The review also led to a stay of execution in May. Willie Jerome Manning, a 44-year-old man convicted of murdering two college students in 1992, was scheduled to die by lethal injection in Mississippi. But the Justice Department discovered flaws in the forensic testimony that led to his conviction, which halted the execution pending further investigation.
It is unclear how many inmates are on death row or may have been executed already as a result of faulty hair tests, but the FBI says it will announce partial results of its examination later this summer. The review is currently prioritizing cases in which defendants can be punished by execution. Once that review is complete, the agency will examine cases in which defendants are currently imprisoned.
In a rare public filing in the secret Foreign Intelligence Surveillance Court (FISC), the Justice Department today urged continued secrecy for a 2011 FISC opinion that found the National Security Agency’s surveillance under the FISA Amendments Act to be unconstitutional. Significantly, the surveillance at issue was carried out under the same controversial legal authority that underlies the NSA’s recently-revealed PRISM program.
EFF filed a suit under the Freedom of Information Act in August 2012, seeking disclosure of the FISC ruling. Sens. Ron Wyden and Mark Udall revealed the existence of the opinion, which found that collection activities under FISA Section 702 “circumvented the spirit of the law” and violated the Fourth Amendment’s prohibition on unreasonable searches and seizures. But, at the time, the Senators were not permitted to discuss the details publicly. Section 702 has taken on new importance this week, as it appears to form the basis for the extensive PRISM surveillance program reported recently in the Guardian and the Washington Post.
The government has seeked to block EFF’s FOIA suit by arguing that only the FISC, itself, can release the opinion. In an effort to remove that roadblock, EFF filed a motion with the FISC on April 22 seeking the surveillance court’s consent to disclosure, should the document be found to be otherwise subject to release under FOIA. In its response filed with the FISC today, the government offers a circular argument, asserting that only the Executive Branch can de-classify the opinion, but that it is somehow prohibited by the FISC rules from doing so.
The government’s argument is guaranteed to make heads spin. DOJ earlier argued that it lacks discretion to release the FISC opinion without the FISC’s consent, but DOJ now argues that if the FISC were to agree with EFF, “the consequence would be that the Government could release the opinion or any portion of it in its discretion.” But FISC material is classified solely because the Executive Branch demands that it be, so release of the opinion has always been a matter of Executive discretion.
Frankly, it’s difficult to understand what DOJ is saying. The Government seems to have a knee-jerk inclination towards secrecy, one that often – as in this case – simply defies logic. The government’s bottom line is this: their rules trump the public’s statutory rights. But it’s not the province of the Executive branch to determine which rights citizens get to assert.
The events of the past week have demonstrated that the public is angry about the NSA’s domestic surveillance program. EFF hoped the public outcry might lead the government to rethink it’s position in this case (and, notably, DOJ has in two other EFF cases). But, for now, the government is digging in its heels and refusing to budge. But a democracy demands more. When the government acts unconstitutionally, the public has a fundamental right to review, understand, and correct that government action. Despite the DOJ’s filing today, EFF intends to keep fighting against the government’s secret surveillance practices.
President Obama is reportedly picking a former hedge fund executive turned senior Bush administration official at the Justice Department by the name James Comey to be his next head of the FBI. Like Chuck Hagel, this largely meaningless nomination in terms of actual policy is being played up as meaningful by the hacks whose job it is to do that sort of thing.
Forget the pundits. Here’s what the nomination means, if anything, by way of remarks Comey made at a press conference in 2004:
Had we tried to make a case against Jose Padilla through our criminal justice system, something that I, as the United States attorney in New York, could not do at that time without jeopardizing intelligence sources, he would very likely have followed his lawyer’s advice and said nothing, which would have been his constitutional right.
He would likely have ended up a free man, with our only hope being to try to follow him 24 hours a day, seven days a week, and hope — pray, really — that we didn’t lose him.
Trials can be so inconvenient, especially when the criminal justice system only affords the state a 93 percent conviction rate. You really don’t want to take any risks when it comes to national security. Indeed, “We could care less about a criminal case when right before us is the need to protect American citizens and to save lives,” Comey told reporters, presumably grabbing his genitals. “We’ll figure out down the road what we do with Jose Padilla.” His remarks mean he will do well at the FBI, that Comey, leading a department where protecting Americans has long served as justification for ignoring their rights.
Padilla ended up being labeled an “enemy combatant” and stashed away in a Naval brig, spending nearly four years in solitary confinement, which in the words of a psychiatrist who examined him led to the “destruction of a human being’s mind.” Despite his years spent being tortured in military custody, however, Padilla was ultimately tried and convicted within the civilian criminal justice system. A final punch to the gut, because this America and we are terrible: the mentally destroyed Padilla’s original conviction of 17 years in prison for expressing an interest in (if not actually engaging in) violent jihad was overturned for being too lenient.I hope you like your humor dark.
The House Judiciary Committee is investigating whether Attorney General Eric Holder lied under oath during his May 15 testimony on the Justice Department’s (DOJ) surveillance of reporters.
The panel is looking at a statement Holder made during a back-and-forth with Rep. Hank Johnson (D-Ga.) about whether the DOJ could prosecute reporters under the Espionage Act of 1917, an aide close to the matter told The Hill.
“In regard to potential prosecution of the press for the disclosure of material — this is not something I’ve ever been involved in, heard of, or would think would be wise policy,” Holder said during the hearing.
However, NBC News reported the following week that Holder personally approved a search warrant that labeled Fox News chief Washington correspondent James Rosen a co-conspirator in a national security leaks case.
The panel is investigating whether NBC’s report contradicts Holder’s claim that he had not looked into or been involved with a possible prosecution of the press in a leaks case.
The May 15 Judiciary hearing was held after The Associated Press revealed Justice had secretly subpoenaed its phone records in a separate leaks investigation.
Justice did not return a request for comment, but Johnson on Tuesday defended Holder, arguing his statement was specific to Johnson’s line of questioning about the Espionage Act and not meant to pertain to other investigations.
“The attorney general’s statement that no journalists have been prosecuted under the Espionage Act during his tenure is accurate,” he told The Hill.
Johnson said he raised the Espionage Act issue because he believes the law could be misused to target reporters due to the way it was written. He argued it should be changed.
“Congress is responsible for protecting the press while giving law enforcement the tools to prosecute officials who leak classified information,” Johnson said. “I support considering amendments to the Espionage Act and passing the Free Flow of Information Act to refine this balance.”
Rep. John Conyers Jr. (D-Mich.), the ranking member of the Judiciary Committee, told The Hill that Holder was “forthright” with the panel and that there was “no need to turn a policy disagreement into allegations of misconduct.”
But Rep. James Sensenbrenner Jr. (Wis.), the second-ranking Judiciary Committee Republican, told The Hill that Holder should resign.
He accused the attorney general of misleading the panel during the investigation of the “Fast and Furious” gun-walking operation, and again when he claimed to not know about the AP probe.
“As we saw in Fast and Furious and are seeing now, Attorney General Holder refuses to hold himself accountable,” Sensenbrenner said. “He misled the Judiciary Committee under oath when he said he had not heard about Fast and Furious and he misled us again when he claimed to be unaware of the AP scandal. The head of DOJ should be someone the American people can trust. Attorney General Holder should resign.”
Justice’s probe into national security leaks is threatening to become the biggest controversy of Holder’s career.
President Obama last week said he was “troubled” by reports about the DOJ’s surveillance of reporters, and argued that journalists “should not be at legal risk for doing their jobs.”
He ordered Holder to review his department’s guidelines governing investigations that involve reporters. The DOJ will present its findings to the president on July 12.
A report in The Daily Beast over the weekend suggested Holder felt a sense of personal remorse over the aggressive tactics used in targeting the Fox News reporter. Citing aides close to Holder, the article said the Attorney General knew Justice would be besieged by questions about the two probes as he read a Washington Post story about the investigation of Rosen.
The DOJ seized Rosen’s personal emails and used other surveillance methods to investigate whether he was complicit in a leak of classified information. It also examined Rosen’s phone records and tracked his visits to the State Department using security-badge data during the 2009 probe.
Justice filed legal papers saying Rosen may have acted as “an aider, abettor and/or co-conspirator” by getting materials from a government official also under investigation.
The investigation was primarily focused on rooting out Rosen’s alleged source, a State Department worker who is facing federal charges for disclosing classified national security information and could see a trial as soon as next year. The DOJ has said it never intended to prosecute Rosen.
Some Republican senators have said Holder should not be in charge of reviewing his own department.
Speaking on CBS’s “Face the Nation” on Sunday, Sen. Tom Coburn (R-Okla.) called Holder’s review a “conflict of interest.” Sen. Lindsey Graham (R-S.C.) said a special counsel or some other independent body should be appointed to conduct the review.
The DOJ has also faced criticism over its seizure of phone records belonging to the AP. The news wire was never a target of that investigation.
The House voted to find Holder in contempt over his refusal to turn over documents to lawmakers on “Fast and Furious,” an operation in which the Bureau of Alcohol, Tobacco, Firearms and Explosives purposely allowed guns to be illegally purchased in the United States and Mexico in the hope they could be tracked.
In case you had any doubt that federal prosecutors favor corporations over individuals, check out Mythili Raman’s testimony before a House hearing this week.
Raman is the acting chief of the Criminal Division at the Department of Justice.
She appeared before the Oversight and Investigations Subcommittee of the House Financial Services Committee.
The title of the hearing — “Who Is Too Big to Fail: Are Large Financial Institutions Immune from Federal Prosecution?”
In a nutshell, the answer is — Yes they are immune from federal prosecution.
But it’s not just them.
It’s the vast majority of major corporate criminals, which now are granted deferred and non prosecution agreements when twenty years ago they were forced to plead guilty.
This sea change in corporate crime practice was ushered in by then Deputy Attorney General Holder in 1999 when he drafted the Principles of Federal Prosecution of Business Organizations. (Holder has been through the revolving door since — over to Covington & Burling to defend the corporations he’s now charged with prosecuting, then back to the Justice Department as Attorney General under President Obama. And no doubt, soon back to Covington.)
Under the subsequent rewrites of the Holder memo, federal prosecutors must now take into consideration the collateral consequences of a criminal prosecution on a major corporation including “whether there is disproportionate harm to shareholders, pension holders, employees, and others not proven personally culpable, as well as impact on the public arising from the prosecution.”
And this, along with the the eight other factors that prosecutors must take into account before prosecuting a corporation tilts the balance away from prosecution and toward deferred and non prosecution agreements.
Raman made it a point to emphasize twice during her testimony that individuals are not given the same consideration.
“For individuals, collateral consequences never enter into the equation,” Raman said.
After all, collateral consequences for individuals can be devastating.
According to the American Bar Association Task Force on Collateral Consequences, the individual convict “may be ineligible for many federally-funded health and welfare benefits, food stamps, public housing, and federal educational assistance.”
“His driver’s license may be automatically suspended, and he may no longer qualify for certain employment and professional licenses. If he is convicted of another crime he may be subject to imprisonment as a repeat offender. He will not be permitted to enlist in the military, or possess a firearm, or obtain a federal security clearance. If a citizen, he may lose the right to vote. If not, he becomes immediately deportable.”
And Raman says that federal prosecutors can’t take these into consideration.
But must take the collateral consequences of a corporate conviction into consideration.
Why the difference?
Because the corporate crime lobby has marinated the justice system.
And morphed our criminal justice system from one that was meant to deliver equal justice for all to one where corporate criminals reign supreme.
“You can imagine why, when I see some of the biggest banks in the world, who get a slap on the wrist, for laundering drug money from the drug cartels, and (their executives) are not going to jail” Congresswoman Maxine Waters (D-California) told Raman at the hearing. “And then we have all of these young people getting arrested, some of them not criminal, just stupid, getting involved with small amounts of cocaine. And yet we have some of the richest, most powerful banks in the world laundering drug money from the drug cartels. Why don’t they (the bank executives) go to jail?”
Raman started to answer and Waters cut her off.
“We know what you do,” Waters said. “It’s what you do that we don’t like. What you do is — they get fined. And it’s a cost of doing business.”
Russell Mokhiber edits the Corporate Crime Reporter.
The journalism world has been rightly outraged by the Justice Department dragging the Associated Press (and now a Fox News reporter) into one of its sprawling leak investigations. As we wrote last week, by obtaining the call records of twenty AP phone lines, “the Justice Department has struck a terrible blow against the freedom of the press and the ability of reporters to investigate and report the news.”
But there are several other important lessons that this scandal can teach us besides how important free and uninhibited news-gathering is to the public’s right to know.
1. Weak Privacy Laws That Doomed AP Affect Everyone
The AP detailed in its letter to the Justice Department how its privacy was grossly invaded even though the government accessed only the call records of its reporters and not the content of their conversations. We completely agree. Unfortunately, this isn’t just a problem in the AP investigation. Law enforcement agencies routinely demand and receive this information about ordinary Americans over long periods of time without any court involvement whatsoever, much less a full warrant.
For example, according to information released by the phone companies to Rep. Ed Markey, Sprint alone received a staggering 500,000 subpoenas for call records data last year.
The DOJ’s decision to dive into these call records shows the growing need to update our privacy laws to eliminate the outmoded Third Party Doctrine—which holds that anything you give to a service provider, or that a service provider collects as part of providing you a service—can retain no reasonable expectation of privacy. In an era where email is stored by our providers, cellphone companies keep records that track our location and cloud services hold our documents, it’s long past time to bring our interpretation of the Fourth Amendment and statutory electronic privacy laws in compliance with the 21st Century.
In response to the AP scandal, a bipartisan coalition in Congress just introduced a bill to partially fix this problem called The Telephone Records Protection Act. The bill would require the Justice Department to get a judge’s approval before seeking these records. At EFF, we think the government should have to go even further than a court order: a judicial warrant showing the kind of probable cause required by the Fourth Amendment should be the standard. But this bill is certainly an improvement over administrative subpoenas, which don’t need a sign-off from a judge at all and allow the Executive branch to seek information without any external check.
2. Phone Companies May Give Up Your Information Without Telling You
As the New York Times reported, the AP is still examining if and when any telephone companies tried to push back on the over-broad requests for its call records. “But at least two of the journalists’ personal cellphone records were provided to the government by Verizon Wireless without any attempt to obtain permission to tell them so the reporters could ask a court to quash the subpoena,” the Times said. And it also seems clear that the AP itself wasn’t given notice before their phone company turned over the records.
In EFF’s 2013 “Who Has Your Back” report, which tracks several ways in which communications companies can help protect user privacy, we give a star for promising to notify users about government demands for data whenever whenever the company is not legally prevented from doing so. Notably, Verizon does not have such a notification policy and did not receive a star. In fact, Verizon was the only company to receive zero stars.
This isn’t a small problem or just a problem for journalists. Verizon received 260,000 similar subpoenas for call records last year. The government requests this information with regularity, and given the phone companies control the data, communications company policies are all that stand between you and governmental overreach.
Users should demand that their communications companies notify them when the government comes seeking information, unless they are legally barred by a court order.
3. Government often Overstates National Security Claims, Over-classifies Information
We’ve written many times about the many ways “national security” has been invoked—and exaggerated—in order to cover up government embarrassment or wrongdoing, or to assert powers that would normally not be granted under the Constitution. The government routinely over-classifies information that should never be secret, according to reports commissioned by the White House itself.
The most glaring example for EFF is our lawsuit over the NSA warrantless wiretapping program, where the government won’t admit or deny that the program even exists, citing the danger to national security, despite thousands of pages of public evidence. The government has argued the same thing in cases about torture and the CIA drone program where, many times, the same information that they claim is secret is on the front pages of the nation’s newspapers.
In the AP’s case, while Attorney General Holder says this leak put “lives at risk,” John Brennan said the opposite around the time of the story (“Brennan said the plot was never a threat to the U.S. public or air safety,” reported Reuters). The AP also held its story for six days until the CIA told them it was safe to publish and the White House had a news conference planned the day after the story to announce the successful counterterrorism operation.
As the late Supreme Court Justice Huge Black once said, “The word ‘security’ is a broad, vague generality whose contours should not be invoked to abrogate the fundamental law embodied in the First Amendment.”
4. There’s Not Much Recourse For Prosecutorial Misconduct
In this case, just like the case of Aaron Swartz, there has been widespread criticism that the Justice Department has abused its authority and aggressively pursued parties in an unprofessional manner. As we detailed last week, it seems the Justice Department didn’t follow its own guidelines when issuing subpoenas about[?] the reporters, or at least went to the very edge of its own guidelines.
Just like in the Swartz case, the specific prosecutor has a history of over-aggressive prosecutions (even being accused of overzealous prosecution by Eric Holder himself when he was in private practice). Yet when Congress asked Holder at a hearing about the allegations, just like in the Swartz case, he did not admit to any wrongdoing, and was able to deflect questions about his department’s handling of the case. Unfortunately, there is not much recourse for meaningful remedy for the public in these situations, and this case is just the latest example.
5. Journalists Need to be Pro-Active in Protecting Their Digital Security
In an age where warrantless surveillance is skyrocketing and governments potentially have access to an astonishing amount of information, journalists must learn to proactively protect both themselves and their sources.
The Committee to Protect Journalists Journalist Security Guide is an excellent place to start. It addresses concerns faced by journalists working inside the United States and internationally.
Wired published an op-ed last week about the care one needs to take from the source’s end if one wishes to send information to the press undetected. Much of the advice is applicable to reporters talking to sources as well. Additionally, the New Yorker has just released a promising—but un-tested—anonymous leak submission system, coded by Aaron Swartz before he tragically died in January. In certain circumstances physical mail remains the safest option.
Overall, the final lesson is that journalists, and sources, need to take security seriously. Trusting that the government won’t come after you because you’re engaged in journalism, serving the public interest, or helping reveal wrongdoing is plainly not sufficient.
US Attorney General Eric Holder has claimed he was unaware of the subpoenas for AP’s phone records, but defended them as a necessary measure. Holder recused himself from the case that has been branded as an “unprecedented intrusion” into press freedom.
US lawmakers questioned the attorney general at a House Judiciary Committee about the two months of AP phone records obtained by the Justice Department without permission. In a session that saw the attorney on the back foot amid calls for his resign, he maintained his ignorance in the “ongoing matter.”
Flatly denying any prior knowledge to the subpoenas and who had issued them, he stated that he was 99 per cent sure that deputy attorney general James Cole had issued them.
“The matter is being supervised by the deputy attorney general. I am not familiar with the reasons why the subpoena was constructed in the way that it was because I’m simply not a part of the case,” Holder told the committee, adding he was confident that the people who are involved in the investigation adhered to Justice Department regulations.
Investigators wish to discern why it was necessary to gather so much information from AP phone records. The Justice Departments claims that the records were seized as part of an investigation into leaked data on a CIA operation in Yemen to stop an airliner bombing plot on the anniversary of the death of Osama Bin Laden.
Holder stressed that the leak was very serious and had put the safety of the American people at risk and as such the Justice Department’s action was justified.
Passing the buck
The Justice Department admitted its surveillance of AP’s phone lines in a letter to the organization’s heads last Friday. AP’s Chief Gary Pruitt reacted with ire, condemning the intrusion as a gross violation of press freedom that is inexcusable. AP estimates that over 100 of its journalists were affected by the phone surveillance and has implicated the involvement of the attorney general, alleging that subpoenas require his signature to be carried out.
There was a degree of frustration at Holder’s answers during the hearing due to his inability to answer questions on the subpoenas and why the Justice Department failed to negotiate with AP prior to the subpoenas, which is usually standard practice in such situations.
“There doesn’t appear to be any acceptance of responsibility for things that have gone wrong,” Rep. James Sensenbrenner, R-Wis., told Holder. He suggested that Justice Department office should stop by Harry S Truman Presidential Library and take a photo of the famous sign, “The buck stops here.”
The White House has also claimed ignorance, stating that it had no knowledge of “any attempt by the Justice Department to seek phone records of the AP.”