JPMorgan Will Pay Record Breaking $13 Billion Justice Dept Fine (Holder strikes?)

JP Morgan Chase has agreed to pay a record breaking fine to the Justice Department to settle federal and state lawsuits over the bank's mortgage-backed securities business at the height of the financial collapse, according to multiple reports. This is everything we know so far.

The Wall Street Journal reports J.P. Morgan Chase lawyers reached a tentative agreement late Friday night for a record breaking $13 billion settlement with the Justice Department that would relieve the bank from many state and federal lawsuits and investigations, after weeks of heated negotiations between lawyers representing both sides. This is the largest settlement ever paid to the federal government.

Attorney General Eric Holder, his deputy Tony West, and Stephen Cutler, the bank's general counsel, knocked out the initial terms of a deal last night, though things are still being finalized. The Journal explains what the settlement gets JPMC out of:

The deal does include a roughly $4 billion agreement with the Federal Housing Finance Agency to settle allegations that J.P. Morgan misled Fannie Mae FNMA +0.65% and Freddie Mac about the quality of loans it sold them in the run-up to the 2008 financial crisis, the person said.

The deal would also resolve a separate suit brought by New York state's attorney general, Eric Schneiderman, the person said.

So that equals out to $9 billion in fines and that separate $4 million going to relief for struggling home owners. Reuters is reporting the same numbers.

The settlement does not relieve JPMorgan from the Justice Department's ongoing criminal investigation of "the bank's issuance of mortgage-backed securities between 2005 and 2007," the Journal says. The criminal probe had lawyers for both sides at a gridlock: JPMC wanted the investigation dropped, but Holder refused, and then squeezed the bank for money, according to The New York Times:

The penalties eclipse what the bank previously offered to pay. Until now, JPMorgan was offering about $11 billion in total. And it was refusing to increase its offer until the Justice Department dropped a parallel criminal investigation into the bank’s sale of troubled mortgage securities to investors.

What this record breaking settlement means for JPMorgan chairman and CEO Jamie Dimon remains unclear. The bank recently set aside $23 billion to settle its numerous ongoing legal battles, and this single settlement took a major chunk out of that war chest. As Quartz's Tim Frenholtz outlined recently, this deal is really only the tip of the iceberg for JPMC, which is not a good sign for Dimon.

The pundit sharks have been swirling around Dimon lately, smelling blood in the water calling for his head on a platter. Few presented the argument against Dimon as articulately as Salon's Alex Pareene during a recent CNBC appearance:

I think that any time you’re looking at the greatest fine in the history of Wall Street regulation, it’s really worth asking should this guy stay in his job. In any other industry — I can’t think of another industry. If you managed a restaurant, and it got the biggest health department fine in the history of restaurants, no one would say “Yeah, but the restaurant’s making a lot of money. There’s only a little bit of poison in the food.”

One person defending Dimon recently was the godfather of modern investing, Warren Buffett. If a cop follows you for 500 miles, you’re going to get a ticket,” Buffett told Andrew Ross Sorkin in an interview on CNBC this week. "And you’ve had a lot of cops been following a long time and they’re going to write some tickets."

Does that money go directly to DNC coffers, or is it laundered first?

(Sneer)---there's zillions of ways to launder the $14B---IF Dimon is foolish enough to hand it over to the Chicago criminals in the WH.

These criminal are consummate con artists---they can make money disappear faster than a cream puff at a Weight Watchers weigh-in. There are numerous ways the connivers juggle money around to benefit themselves.

CASE IN POINT---When he went to jail, investigators found Ponzi King Bernie Madoff had stashed billions offshore---into a labyrinth of financial entities.

COLLUSION AND CONSPIRACIES GALORE Some $8.9 billion was funneled to Madoff through a dozen so-called feeder funds based in Europe, the Caribbean and Central America......a labyrinth of hedge funds, management companies and service providers that, to unsuspecting outsiders, seemed to compose a formidable system of checks and balances.

But the purpose of this complex architecture was just the opposite: the feeder funds provided different modes for directing money to Madoff in order to avoid scrutiny and generate more fees.

========================================================

WIKI.COM Stanley Chais, a philanthropist who invested heavily with Mr. Madoff, and Carl J. Shapiro, one of the money manager's oldest friends, are among at least eight Madoff investors and associates being scrutinized by the U.S. attorney's office in Manhattan. Prosecutors are continuing to probe Madoff family members and employees.

Others include: Frank Avellino, a Florida accountant who ran an investment fund that invested client money; Noel Levine, a real-estate investor who works out of a two-room office on the 17th floor, next door to Madoff's fraudulent investment operation, and Palm Beach investor Robert Jaffe, a son-in-law of Mr. Shapiro who referred potential investors to Madoff. [4]

Madoff Securities International Ltd.----In 2008, about $1 billion was transferred last between Madoff’s U.S. firm and Madoff Securities International Ltd. in London. [5][6] On March 24, 2009 Judge Louis L. Stanton granted power of attorney to Irving Picard, trustee, over Madoff's controlling stake in London.[7]

Authorities in the U.K. are seeking evidence of money laundering involving the London business, Madoff Securities International Ltd., which opened in 1983 as a separate legal entity from Mr. Madoff's U.S. New York office. He allegedly sent more than $250 million beginning as early as 2002, from his New York-based firm, Bernard L. Madoff Investment Securities LLC, to the U.K. office and then back to accounts in the U.S.[5][6]

In 2000, Madoff began to add staff and expand the operation, and loaned the business $62.5 million. He had a staff of 25, including traders, managers and support. Instructions to staff was that they communicate with Madoff Securities through personal e-mail accounts, not through company e-mail.[5]

There were nine directors. Family members with shares included Mark and Andrew Madoff, Peter Madoff, and Bernard himself. Ruth Madoff, Bernard Madoff's wife, also held shares. [8] Non-family members with shares included Maurice J. "Sonny" Cohn. Madoff and Cohn were shareholders in Cohmad Securities, which steered investors to Mr. Madoff's advisory business.

In 1987, Mr. Cohn had shares of Madoff Holdings Ltd., a predecessor to the current London firm. In 1998, Mr. Cohn held 35,624 non-voting shares, some of which he transferred to "BL Madoff" in 1998, and the rest that he "disposed of" in 2004.[8]

Paul Konigsberg, a New York City accountant and a longtime friend for more than 25 years, prepared two Madoff Family Foundation tax returns, and received the non-voting shares, valued at $35,000. He did work for the London office when it was first opened. [8] A general ledger of Madoff accounts listed Konigsberg, of the reputable accounting firm of Konigsberg, Wolf & Co., as receiving $30,000 a month to advise the MSIL operations, and funnel client checks to the London office for Madoff's own use.[9]

Clients were often directed to Mr. Konigsberg by Mr. Madoff and his family. Mr. Konigsberg prepared the tax returns of foundations of six other families, many of which have lost millions, even hundreds of millions, of dollars. He also represented scores of individual Madoff investors.

Mr. Konigsberg's firm has received a civil subpoena from the SEC. His Madoff-related clients included Carl and Ruth Shapiro, Boston philanthropists whose foundation lost $145 million, and whose son-in-law, Robert M. Jaffe, under investigation, is a Madoff business partner.[9][10]

Konigsberg held Madoff accounts under his name including two in the name of the Westlake Foundation. Paul J. and Judith Konigsberg are officers and directors of the foundation. He owns homes in his wife, Judith's name in Greenwich, Connecticut and Palm Beach Gardens, Florida.[11]

On April 20, 2009, Steven Leber filed a $4 million lawsuit against Konigsberg and his accounting firm for negligence, and breach of fiduciary duty.[12] Konigsberg answered the charges with affirmative defenses.[13]

Evidence is being gathered by investigators on a U.S.-U.K. task force that Konigsberg and Levy, a real-estate mogul and philanthropist are believed to be involved in an international transfer of money. Levy is believed to have helped Paul Konigsberg funnel checks to London. And investigators in New York say there were billions of dollars worth of checks going back and forth between Madoff and Levy.[9]

Ruth and Bernie Madoff had an intimate relationship with Levy and his wife, Betty. Madoff was long known to have been Levy's "fixer," obtaining everything from choice restaurant reservations to emergency medical care. Levy had offices one floor below Madoff's in New York’s Lipstick Building. It was Levy who introduced high-profile investors to Madoff.

Jeanne Levy-Church's losses forced her to shut her JEHT Foundation and her parents’ foundation, the Betty and Norman F. Levy Foundation, lost $244 million. JEH helped the less fortunate, especially ex-convicts.[9][10]

Good point. The trustees for bank investors should threaten to sue Holder if he does not account for the monies, and demand to know in which banks Holder deposited the money.

(B) They need to mobilize the Bank Secrecy Act---in which banks are required to establish, implement and maintain programs designed to detect and report suspicious activity indicative of money laundering and other financial crimes.

“The Bank Secrecy Act was enacted to protect the public from harm by identifying and detecting money laundering from criminal enterprises, terrorism, tax evasion or other unlawful activities,” the special agent in charge for Internal Revenue Service Criminal Investigation, explained.

<><> Joint bank accounts might be used to facilitate the transfer of of govt funds. Monies may pay for personal and private expenses, credit cards, real estate sunsidies and vehicle purchases.

<><> To cover their tracks, fake invoices might be created to show that money deposited into accounts was being used for legitimate investment purposes.

The scheme might be advanced by issuing phony statements of payments from financial sources that actually covered the transfer of funds for DNC/admin insiders own use.

<><> L/E is directed to get ahold of: (1) copies of DNC checks, (2) wire transfers, (3) account statements, (4) invoices, (5) bills, (6) delivery tickets, (7) correspondence including e-mail, contracts, loan agreements, and, (8) any other books or records. L/E should also explore (a) monies paid to brokers, sub-brokers, (b) family members, (c) mortgage brokers, (d) financial managers, and, (e) real estate agents, brokers, and developers.

<><> L/E should scrutinize DNC bank accounts for suspicious activites: (A) large deposits, (B) funds transferred from one account into another, (C) frequent requests for withdrawals.

RUSSIAN LAW ENFORCEMENT UNCOVER $1.1 BILLION DOLLAR MONEY LAUNDERING OPERATION (interesting read).

Russian police said that they uncovered a money-laundering scheme in which more than 400 people were involved in transferring $1.1 billion out of the country. Several commercial banks and about 100 Russian and foreign companies -- some of which were so-called "one-day companies" -- were used to funnel the money abroad, the Interior Ministry said in a statement.

The money was used for real estate purchases in Cyprus, Republic of Panama and the Baltic states. In more than five years of operations, the criminal organization earned a 2 percent profit on the transfers, amounting to about $17.3 million, police said. Police arrested seven people considered to be leaders of the organization, including a 42-year-old man thought to be the head of the operation, tagged RIA Novosti.

The man's name was not reported.

During the investigation, police confiscated more than $30 million in a total of 85 searches. One-day companies -- companies created to exist as little as a few hours -- were used to transfer the money, officials said.

Of the 3.9 million companies in Russia, just 2 million are real, the Central Bank said. Deputy Prime Minister Igor Shuvalov said one-day companies prevent up to $30 billion from going into the government's tax revenues each year.

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