We are rooting for you, Loretta Lynch. And for Justice.

            As readers of this website know, we are hardly fans of Eric “ too rich to jail” Holder. Indeed, the impetus for our book, “JP Madoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook” was Holder’s refusal as Attorney General to prosecute a single criminal banker for the litany of indisputable crimes committed in the last eight years and his sale of get-out-of-jail-free cards to senior officers of JPMorgan Chase so that they were not prosecuted for their complicity in Madoff’s crimes and for their dishonesty with respect to the “London Whale” scandal. We are by no means sorry to see Holder go and to welcome the new Attorney General, Loretta Lynch.

            Predictably, Mr. Holder exited office by giving a Christmas present in April to Deutsche Bank traders for their role in the LIBOR interest rate scandal– a guilty plea and a $2.5 billion dollar settlement by the bank, but no jail time for anyone–despite the fact that the Justice Department had emails in which Deutsche Bank traders revealed that they knew they were committing crimes and they boasted about it. Not since Bill Clinton pardoned Mark Rich on Clinton’s last day in office has there been such a disheartening example of the power of big money. But bank fraud is not a victimless crime and one would hope that someone in our country ’tis of thee would want to protect innocent Americans against ruthless criminal bankers. No such person has yet appeared in the Obama administration.

            While we therefore welcome Ms. Lynch’s ascension to the office, in candor, we probably would say that anyone short of Jamie Dimon as Attorney General would likely be an improvement over Mr. Holder. Nonetheless, in addition to a natural tendency to give Ms. Lynch the benefit of the doubt and sincere good wishes, there are some things that give hope. In addition to an impressive resume, Ms. Lynch handled her confirmation hearings superbly, her answers being both thoughtful and well reasoned.

            On the other hand, she served as a director of the New York Federal Reserve Board from 2003 to 2005, where she worked with people like former Citigroup Chairman Sandy Weill and ex-Lehman Brothers CEO Richard Fuld. Not men to be proud of. And, as United States Attorney from the Eastern District of New York, she was involved in two high profile financial fraud cases, one in which Citicorp paid $7 billion in settlement for its role in the mortgage- backed securities fraud, and one in which HSBC paid $1.7 billion and took a deferred prosecution agreement for facilitating money-laundering. Both cases are hallmarked by a too common refrain: no one went to jail. In this respect, these two prosecutions were an insult to the American public.

            Of course, knowing thy enemy from the inside may not be a bad thing and Ms. Lynch may plausibly say that, as a U.S. Attorney, she had to follow the policies of the Attorney General concerning whom she did and did not prosecute. But therein lies the rub. No Attorney General is completely free of the policies imposed by the President. To the extent President Obama is the problem, neither Ms. Lynch nor anyone else is likely to be the solution.

            Ms. Lynch’s words at her confirmation hearing were politically correct, but she will ultimately be judged by her deeds. And, because most new Presidents appoint a new Attorney General, Ms. Lynch’s time for action is short. One of the biggest obstacles to Ms. Lynch’s ability to pursue any policy agenda will be the question of whether she is effectively a caretaker, treading water under a lame duck President.  And one of her biggest challenges will be to dispel that image as soon as possible.

            With that in mind, we issue an urgent public plea to Ms. Lynch: while the road to redemption may be long, it starts with a single step. Here are three steps she can take in her first month in office that will establish her bona fides.

            First, seek the indictment of at least one senior bank officer and announce that any plea deal will entail significant jail time.   It is really very simple: one prosecution is worth a thousand settlements. Settlements get paid for by the shareholders; but not even Jamie Dimon can buy a proxy to serve his jail time. Once Wall Street sees that someone like Jamie Dimon can be put in jail, the ethical standards of America’s banksters will rise sharply.

            Second, seek legislation requiring that if a federally insured financial institution is required to pay fines to or settlements with any regulatory agency aggregating more than $2.5 billion in any two year period based on conduct that, if established, would constitute a crime under any law, then the CEO, President, and all Board members must step down, disgorge all of the bank’s stock they own, and they are disqualified from holding any office at any federally-insured institution for the rest of their lives. The shareholders of JPMorgan Chase may want Jamie Dimon to be CEO because he has proven that crime does pay, but since federally insured financial institutions are gambling with taxpayers’ money, the government should take a much stronger role in assuring that we don’t have criminals controlling our financial institutions.

            Third, seek legislation establishing a permanent special prosecutor’s office that will have the authority to prosecute major bank frauds independently of the Justice Department. Just as Clemenceau observed that war is too important to be left to the generals, so we observe that politically sensitive prosecutions are too important to be left to politically appointed prosecutors—as Eric Holder’s dismal record shows. As we set out in Chapter 3 of our book, the link between the big banks and the politicians to whom they contribute is much too close for comfort. It is not surprising and it is not avoidable. Willy Sutton robbed banks because that’s where the money was; politicians cater to banksters because that’s where the money is. You don’t bite the hand that feeds your campaign kitty.   The appointment of the special prosecutor will not be done by the President or the Attorney General but by a panel of three federal judges, one from the District Court, one from the Court of Appeals and one from the Supreme Court, to be chosen by lot, with the composition of the panel to be changed with each new appointment.

            There are, of course, many more things on our wish list, but above all, we wish Ms. Lynch good luck because as Eric Holder proves, if the Attorney General fails, the American people suffer. Ms. Lynch offers the promise of hope and a new beginning. It would be both tragic and a tragedy if she turns out to be just a place holder, or worse yet, an Eric Holder.

Learn more at http://www.jpmadoff.com

We are rooting for you, Loretta Lynch. And for Justice.

The Buck Stops With Jamie Dimon

Helen Davis Chaitman and Lance Gotthoffer1

We were amused to read on bloomberg.com that JPMorgan Chase has instituted a program to “identify rogue employees before they go astray.”2 Apparently, this is the Bank’s response to its payment of more than $36 billion in fines, settlements and penalties for its violations of law in the last four years. The Bank is building a surveillance unit to monitor electronic and telephone communication in the investment bank. “E-mails, chats and telephone transcripts can be analyzed electronically to determine if employees are trying to collude or conceal intentions,” said Tim Estes, chief executive officer of Digital Reasoning Systems Inc.

The problem with JPMorgan Chase is not a few rogue low level employees. Just as the fish rots from the head, the people with rotten morals at JPMorgan Chase are the people at the very top of the corporate hierarchy. The $36 billion in fines and settlements that JPMorgan Chase paid out in the last five years is not the work of low-level employees. Rather, it is the result of the illegal conduct of senior officers of JPMorgan Chase, including Jamie Dimon. Hence, there will be no substantive improvement in the ethics of JPMorgan Chase until the Bank gets rid of Jamie Dimon. He has surrounded himself with senior officers who, when the chips are down, are willing to protect the boss even at peril of being branded a liar by the United States Senate. Check out Chapter 6 of “JP Madoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook” to see what we mean.

JPMorgan Chase cannot establish a code of morality for its employees when it is headed by someone who violates the law. As the Senate Subcommittee on Investigations found in its Report on the London Whale, Dimon and JPMorgan Chase’s Chief Financial Officer, Douglas Braunstein, lied about the scope of the Bank’s known losses in an April 13, 2012 earnings call with market analysts. Dimon and Braunstein gave out numerous pieces of false information including Dimon’s dismissal of the media reports on the London Whale losses:


It’s a complete tempest in a teapot. Every bank has a major portfolio. In those portfolios you make investments that you think are wise, that offset your exposures. Obviously it’s a big portfolio, we’re a large company, and we try to run it – it’s sophisticated, obviously complex things, but at the end of the day, that’s our job is to invest that portfolio wisely and intelligently over a long period of time to earn income and to offset other exposures we have.3


According to the Senate Report, at the time Dimon made this statement, he was “already in possession of information about the [Bank’s] complex and sizeable portfolio, its sustained losses for three straight months, the exponential increase in those losses during March, and the difficulty of exiting the . . . positions.”4 In other words, Dimon lied to the analysts. That constitutes securities fraud.

Of course, this is not the only example that Dimon is not fit to run a federally-insured financial institution. Senator Elizabeth Warren has given us another example of Dimon’s totally inappropriate conduct, in her book “A Fighting Chance.” In early 2013, Dimon visited Senator Warren. The Senator described the visit as follows:


When the conversation turned to financial regulation and Dimon began complaining about all the burdensome rules his bank had to follow, I finally interrupted. I was polite, but definite. No, I didn’t think the biggest banks were overregulated. In fact, I couldn’t believe he was complaining about regulatory constraints less than a year after his bank had lost billions in the infamous London Whale high-risk trading episode. . . .

Our exchange heated up quickly. By the time we got to the Consumer Financial Protection Bureau, we weren’t quite shouting, but we were definitely raising our voices. At this point — early in 2013 — Rich Cordray was still serving as director of the consumer agency under a recess appointment; . . . . Dimon told me what he thought it would take to get Congress to confirm a director, terms that included gutting the agency’s power to regulate banks like his. By this point I was furious. Dodd-Frank had created default provisions that would automatically go into effect if there was no confirmed director, and his bank was almost certainly not in compliance with the those rules. I told him that if that happened, “I think you guys are breaking the law.”

Suddenly Dimon got quiet. He leaned back and slowly smiled. “So hit me with a fine. We can afford it.”


This account demonstrates Dimon’s utter disregard for the law. JPMorgan Chase has paid out $36 billion in the last four years because it has violated both civil and criminal laws. Poor people who violate laws go to prison. Unfortunately, the Obama administration does not believe the super-rich who violate criminal laws should be prosecuted. The result is that this nation’s largest financial institution is headed by someone who invites being “hit” with fines and who believes he can buy get-out-of-jail-free cards in exchange for massive political contributions. In fact, he has done so several times.

Aside from Dimon’s rudeness, it is sickening that Dimon can treat with utter disdain a United States Senator who cannot be bought and who wants to represent her constituents and assure that the law protects them. The fact that Dimon has no respect for Senator Warren demonstrates his utter contempt for the principles on which this country was founded — that Congress is intended to represent the will of the people, not just the economic interests of the super-rich.

Until JPMorgan Chase brings in people of integrity at the top of the corporate ladder, any purported investigatory body at JPMorgan Chase is a sham.

We have a suggestion: Ask Senator Elizabeth Warren how she would go about cleaning up the morals of the folks at JPMorgan Chase.


[1] Ms. Chaitman and Mr. Gotthoffer are lawyers and authors of JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook, published on jpmadoff.com.

[2] bloomberg.com, April 8, 2015

[3] Polya Lesova, J.P. Morgan Dimon’s ‘tempest in a teapot’ and other quotables, MarketWatch, (Apr. 13, 2012, 12:46PM), http://blogs.marketwatch.com/thetell/2012/04/13/j-p-morgan-dimons-tempest-in-a-teapot-and-other-quotables/

[4] Senate Report at 11.

The Buck Stops With Jamie Dimon

Obama’s Legacy: Too Rich to Jail

When Attorney General Eric Holder announced his resignation last September, The Daily Currant headlined: “Eric Holder Takes $77 Million Job With JP Morgan Chase.”1 As with all good satire, it had the ring—or is that the sting—of truth. You had to read a couple of paragraphs before you realized it was a joke; and after that the laughs kept coming in almost geometric increments.

Then again, the joke is on the American people. Although he is still on the public payroll, and certainly has not yet announced he is taking a job with JPMorgan Chase, Holder continues to act as if he is in Jamie Dimon’s employ. This is an Attorney General who has never grasped what his job is. Instead of enforcing the criminal laws against our nation’s biggest criminals, he squanders money persecuting impoverished welfare recipients for alleged welfare fraud and allows the bankers who steal billions of dollars to get off scot-free. Despite the fact that it is obvious to every literate American that Wall Street banksters caused the 2008 financial meltdown, Holder hasn’t brought a single indictment against a banker for the sub-prime mortgage fraud, for the Madoff fraud, for the manipulation of the foreign exchange markets, for the manipulation of the commodities markets, for fraudulent debt collection practices, for fraudulent foreclosure practices.

The list goes on and on but the Number 1 lawyer in this country claims he just doesn’t see the crimes. “Responsibility remains so diffuse, and top executives so insulated,” Holder said in 2014, “that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.” So individuals at banks like JPMorgan Chase aren’t responsible for their crimes? Small wonder Holder’s administration has been a criminals-free time zone for all of the big time crooks.

In public comments he gave last month at the National Press Club, Holder mentioned that he has given his staff 90 days to come up with evidence to support prosecutions of Wall Street bankers for wrongdoing involving the sale of mortgage-backed securities in the years leading up to the financial crisis. Holder has had seven years but now he’s in a hurry. He explained to his audience that “To the extent that individuals have not been prosecuted, people should understand it is not for lack of trying.”

Excuse me? The man must be having a senior moment. Holder is sitting on evidence supplied by whistleblower Alayne Fleischmann that JPMorgan Chase officers knowingly and deliberately misrepresented the quality of loans they packaged into mortgage-backed securities. As reported in Chapter 5 of JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook, Ms. Fleischman is a graduate of Cornell University Law School and, in 2006, after several years of practice at a large Wall Street law firm, she was hired by JPMorgan Chase as a transaction manager. In that position, she was responsible for quality control on the mortgages JPMorgan Chase packaged and sold to investors. In late 2006, Ms. Fleischman saw that loan officers were being pressured by their superiors to package loans that were not creditworthy and to lie to their prospective customers about the quality of these loans. Bank officers instructed the people in Ms. Fleischman’s group not to put anything in writing about the loans. Ms. Fleischman reported this to a managing director at JPMorgan Chase. When he did nothing to address her ethical concerns, in January 2007 she filed a written complaint with another managing director, who does not appear to have done anything about it either. She was let go by the Bank in February 2008.

In 2012-13, Ms. Fleischman discussed the fraud she witnessed with the Securities and Exchange Commission and the United States Attorney’s Office in California, both of which said they were investigating JPMorgan Chase’s role in the mortgage crisis. She fully cooperated and gave the government attorneys both anecdotal and documentary evidence of the fraud and how JPMorgan Chase ignored her warnings.

In Ms. Fleischman, the government had a perfect witness. She is poised and articulate; she has no ax to grind against JPMorgan Chase; she was not suing the Bank or seeking money for her story; and she had done everything right: most particularly, filing her complaints in writing for, while witnesses die or lie, documents do not. And the defendant was not exactly sympathetic; it was the “great white whale” you would think any prosecutor would swoon to bring down—for prosecutors are lawyers and lawyers like to do their jobs—with the notable exception of Eric Holder.

Holder’s expected September 2013 announcement of civil fraud charges against JPMorgan Chase never happened. According to investigative reporter Matt Taibbi in The Rolling Stone, JPMorgan President/CEO Jamie Dimon stepped in to negotiate with the Justice Department personally and offered $ 3 billion to settle out of court. Fleischmann’s evidence was reportedly used by the Department of Justice to push Dimon up to $13 billion as a settlement (which Taibbi explained was really only $9 billion). (Once a fraudster, always a fraudster).2 No one went to jail; no one lost his job; no one had to disgorge his bonuses. Now isn’t that the American way a la Eric Holder?

The mortgage crisis caused trillions of dollars of losses to honest, hard-working Americans and nearly brought down the world banking system. But as large and destructive as that fraud was, it is rivaled, if not exceeded, by what Holder is doing. Indeed, the Obama administration has positioned Wall Street to pull off an even bigger scam than it pulled off in the years leading up to 2008.

For Holder to suggest that there have been no prosecutions because, despite his Department’s best efforts, he has not been able to come up with sufficient evidence to prosecute would, but for the fact he is Attorney General of the United States, constitute a misprison of felony. It is also a slap in the face to whistleblowers like Ms. Fleishmann, and while it will have no deterrent effect on the banksters, it is likely to deter future whistleblowers: why go through the agony of being a whistleblower if prosecutors aren’t going to enforce the law?

Eric Holder is the only U.S. Attorney General to have been found in criminal contempt of Congress.3 But Holder’s misdeeds are far greater than contempt of Congress. Holder has shown contempt for the laws of this country and contempt for honest, hard-working Americans who want to live in a country that is not ruled by Wall Street banksters. His instructions to his subordinates to put together a case against banksters in the next 90 days is a patent demonstration of that contempt. No one can put together a criminal prosecution of a complex commercial fraud case in 90 days. It takes months, if not years, of careful preparation. Whatever may be the talents of his subordinates, many of whom are real, as distinct from paper, prosecutors, Holder might as well have told them to build Rome in a day. It is surprising that Holder could not have come up with a much better lie.

Perhaps Holder has reached that stage in his public career where he just does not care anymore. He will undoubtedly leave office with platitudinous paeans from President Obama, his successor, Loretta Lynch, and the Democratic leaders of Congress who are on the Wall Street dole. And while he may not immediately take a job at JPMorgan Chase for $77 million, he will likely land at a large law firm or corporation with a bankster’s compensation package. So why bother to make enemies of people with deep pockets?

One answer is: “You swore to enforce the laws of the United States.” Obviously, that did not motivate Holder. And, unfortunately, the Attorney General’s office was, historically, more often than not a political sinecure. Presidents made their campaign managers either Postmaster General or Attorney General. Once in a blue moon it worked well: think of Robert Kennedy, America’s legendary Attorney General. Most of the time it did not: Harry Daugherty was Warren Harding’s campaign manager turned Attorney General; John Mitchell was Richard Nixon’s. The former will forever be linked to the Teapot Dome scandal, the latter to Watergate.

If they do not get appointed to the Supreme Court, former Attorneys General lead lives of well-remunerated anonymity. If one were asked to choose from the following five names and identify the one that is not a former Attorney General, how many would get it right: Herbert Brownell, Abram Chayes, Edward Levi, James McGranery, and William Saxbe. The question is not biased toward a by-gone era, as the four who did serve as Attorney General all served in 1950 or later.4

Except for the rarities who shine positively or negatively, Attorneys General have no legacy; that prerogative belongs to the President, whose legacy ultimately can be elevated or decimated by the actions of the soon to be anonymous people working under him. Ulysses S. Grant, Warren Harding and even Harry Truman, were all regarded as having corrupt administrations, though none of them was ever thought to be personally corrupt.

One President, in his time, may be associated with several major issues that make his historical image, for better or worse, and this has certainly been true of recent incumbents: Lyndon Johnson: Vietnam and Civil Rights; Richard Nixon: opening China and Watergate; George W. Bush: 9/11 and the wars in Iraq and Afghanistan. Much of the darker side of each of these issues, again for better or worse, was shaped by the President’s advisors. So, we have to blame President Obama for this disgrace. Eric Holder is not playing with his own legacy but with Obama’s.

There is still time for Holder to mitigate the damage he has caused; to say publicly that, having reviewed Ms. Fleischman’s evidence, he is directing the immediate prosecution of senior officers of JPMorgan Chase. If Eric Holder cannot be a crime busting prosecutor in the mold of Thomas Dewey or Rudolph Guiliani, he at least should not be a Brutus. It is not Holder who will go down in history as “Mr. Too Rich To Jail.” That is Barack Obama’s legacy.

© 2015 by Helen Davis Chaitman and Lance Gotthoffer


1. http://dailycurrant.com/2014/09/26/eric-holder-takes-77-million-job-with-jpmorgan-chase/

2. Matt Taibbi, The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare, Rolling Stone, (Nov. 6, 2014), http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106

3. http://www.cnn.com/2012/06/28/politics/holder-contempt/

4. Herbert Brownell was Attorney General in the Eisenhower Administration from 1953 to 1957; Abram Chayes was Legal Advisor to the State Department from 1960-63; Edward Levi was Attorney General in the Ford Administration from 1975 to 1979; James McGranery was Attorney General in the Truman Administration from 1952-53; William Saxbe was Attorney General in the Nixon Administration from 1974-75.


Obama’s Legacy: Too Rich to Jail