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Tag: Wall Street

Eric Starkman: The Unethical Preet Bharara and His Despicable Media Enablers

Eric Starkman is founder and president of STARKMAN, a public relations and crisis communications firm based in Los Angeles.  He was previously a reporter at major newspapers in the U.S. and Canada.

By Eric Starkman
For ticklethewire.com

preet-bharara-time

Growing up in Toronto I had a quintessentially Canadian view about government authority: Only bad people ran afoul of the law.

But my innocence was shattered when I was a young reporter at The Toronto Star and Ontario’s Attorney General leaked me some information about some entrepreneurs who had embarrassed his Administration that I knew to be untrue. I didn’t write the story but other reporters happily picked up the narrative, ultimately giving the government the PR cover to seize the businesses of the entrepreneurs without any due process. I’m still shaken by the abuse of power.

I naively believed that such prosecutorial wrongdoing could never happen in the U.S. My bubble was quickly burst when The Detroit News hired me as a business reporter and assigned me to cover the high profile administrative hearing of Stanford Stoddard, a maverick Michigan banker who the Comptroller of the Currency alleged had misappropriated funds from the bank he founded. In her opening statement, a young ambitious OCC attorney alleged that among Stoddard’s wrongdoings was using bank funds to purchase alcohol. As Stoddard was a devout Mormon the charge was exceptionally damning, so I asked Stoddard’s attorney about the allegation. Turns out the alcohol in question was a bottle of wine for a religious ceremony.

Former New York Attorney General Eliot Spitzer, who was lionized in the media as “The Sherriff of Wall Street,” jolted me with another wakeup call about prosecutorial wrongdoing. Spitzer and his minions routinely spread false or misleading information about my former client Dick Grasso after he was forced out of the New York Stock Exchange because of bogus allegations the former chairman and CEO was overpaid. An example of Team Spitzer’s dishonesty was leaking a document that showed Grasso’s son accompanied him on the private jet the NYSE chartered so Grasso could host a reception at Davos, Switzerland. Spitzer’s team neglected to provide the documentation showing that Grasso reimbursed the NYSE for the cost of his son’s trip.

Preet Bharara, who was just fired as the U.S. Attorney for the Southern District, took Spitzer’s prosecutorial abuse to an even higher level. For a time, Bharara was an even bigger media darling than Spitzer, garnering fawning media coverage for his high-profile cases, including this gusher of a puff piece by William Cohan in Fortune. Bharara loved the media limelight, routinely holding news conferences to trump up publicity for his cases and leaking damaging allegations to obsequious reporters who gladly published them and abetted in the smearing of his targets before they had an opportunity to defend themselves.

As Jesse Eisinger noted last week in Pro Publica, Bharara was no hero. His prosecutorial track record was mixed, as several of his high-profile cases were overturned on appeal. And his practice of arguing his cases in the media earned him the opprobrium of the judge overseeing his case against Sheldon Silver, the former NY Democratic State Assembly speaker, who charged that Bharara’s media blitz “strayed so close to the rules governing his own conduct.”

Even Cohan came to appreciate Bharara’s unethical behavior, publishing this impressive story about the questionable tactics used to pressure former hedge fund manager Todd Newman to settle insider trading charges. Bharara tellingly was too tongue tied to talk to Cohan for a story that was critical of him.

Sadly, the universe of reporters who appreciate the dangers of prosecutorial abuse is limited to a handful of some very experienced reporters.  One of them is New York Times columnist Andrew Ross Sorkin, who has written critically about Bharara and presumably played a meaningful role in the critical portrayal of U.S. Attorney Chuck Rhoades in the Showtime series “Billions.” (Sorkin is one of the show’s creators).  The Rhoades character is clearly based on Bharara, replete with the latter’s petulance and media manipulation. The show also admirably is unkind in its portrayal of a reporter and his pursuit of a scoop.

Best-selling author Michael Lewis took up the cause of Sergey Aleynikov, the Goldman Sachs programmer who was convicted and sentenced to prison for stealing computer code, Jim Stewart wrote about the questionable charges leveled against Zachary Warren, and Joe Norcera wrote an admirable column about the shameful prosecution of Charlie Engle.

Diane Brady, among the fairest and most ethical journalists, recently commented that stories based on leaked documents should be held to the same reporting standards as any news story.  That’s an admirable requirement, but regretfully we’ve entered the Brian Stelter media age, where reporters who publish leaked documents and give anonymous people a platform for their political agendas are deemed “investigative journalists.”

The media can’t be counted on to protect against prosecutorial wrongdoing. But with Bharara out of office, the Southern District is momentarily a safer place for innocent people.

 

Weekend Series on Crime History: The Real ‘Wolf of Wall Street’ Talked About How He Became Corrupted Bloomberg

Weekend Series on Crime History: The Wall Street Journal Report On Bernie Madoff

Market Watch: Don’t Believe Hype of DOJ Crackdown on White-Collar Crime

wall-streetBy Russell Mokhiber
Market Watch

If you ask, corporate criminal defense attorneys will tell you — as they have told me — the one thing their corporate clients want to avoid when facing off against the federal government is an admission of wrongdoing — to have to plead guilty to the crimes they have committed.

Everything else is possible.

Pay huge fines? No problem.

Accept a monitor to report back to the government? Bring it on, especially if the company gets to approve the monitor.

Turn over executives responsible for the crimes? Under the bus they go.

But no guilty pleas for the corporate parent.

That’s why people who follow corporate crime prosecutions closely are taking the release of a memo from the Justice Department that will implement new policies to go after individual corporate executives with a grain of salt.

To read more click here. 

Justice Department to Prioritize Prosecution of Wall Street Criminals

wall-streetBy Steve Neavling
ticklethewire.com

The Justice Department has pledged to prioritize prosecution of Wall Street criminals.

The Boston Globe reports that the DOJ established new rules in an effort to hold individual employees and their companies accountable.

The rules were issued in a memo to federal prosecutors in an attempt to also pressure corporations to cooperate when their executives are accused of wrongdoing.

“Corporations can only commit crimes through flesh-and-blood people,” Sally Q. Yates, the deputy attorney general and the author of the memo, said in an interview Wednesday. “It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.”

FBI Blamed for Demise of Hedge Funds Following Failed Insider Trading Case

By Steve Neavling
ticklethewire.com 

Investors can be a skittish bunch.

When they heard of the federal government’s suspicions of insider trading involving two hedge funds, Level Global Investors and Diamond Capital Management, they fled and the funds shut down, the New York Times reports.

On Wednesday, the two men found guilty of insider trading, Todd Newman and Anthony Chiasson, were vindicated when a federal appeals court overturned their convictions.

The found of Level Global, David Ganek, blamed the FBI for the hedge fund’s demise.

“For the dozens of my high-integrity colleagues at Level Global who lost their jobs and their reputations because the F.B.I. improperly raided our firm in this now-discredited fishing expedition, today’s legal vindication is a reminder of how prosecutorial recklessness has real impact on real people,” Mr. Ganek said in a statement sent by a spokesman.

Newman and Chiasson were found guilty by a jury two years of ago of conspiring to earn millions of dollars making taxes based on inside secrets.

 

Justice Department’s Top Prosecutor to Leave After Successful Fights with Wall Street

By Steve Neavling
ticklethewire.com

Wall Street won’t be sad to see Tony West go.

The highest-ranking prosecutor who gained more than $30 billion in settlements from Wall Street banks plans to leave the public sector, the New York Times reports.

West, who is the No. 3 Justice Department officials, plans to leave Sept. 15.

The New York Times reports that West is headed to the private sector, but it wasn’t immediately clear what he’ll be doing.

West, 49, hired Robert B. Barnett, a career counselor with a remarkable client list that includes President Clinton and Bob Woodward, to help him land a job.

“Over the years, Tony’s efforts have made a tremendous and lasting difference in the lives of millions of people across the country,” Mr. Holder said in a statement. “And although I wish him the best as he opens an exciting new chapter in his career, I will miss his leadership, his many contributions, and his steadfast commitment to the cause of justice.”

FBI Reduces Time Spent on White Collar Crimes by 7%

Steve Neavling
ticklethewire.com

Ever wonder why no one on Wall Street was charged in connection with the 2008 financial crisis?

The FBI will have even less time investigating Wall Street after the bureau reduced the amount of time its agents spend on white-collar crime, the Los Angeles Times reports.

The FBI has reduced its recommendation for white-collar criminal prosecution by 7%.

The new recommendation is 2,001, according to a report by the Transactional Records Access Clearance.

The reduction continues a years-long drop in white-collar crime investigations, the LA Times reported.