Bush's top corporate-crime fighter paid $400 million to settle fraud charges (abrev title)

Bush's top corporate-crime fighter was director company that paid $400 million to settle fraud charges
LESLIE MILLER, Associated Press Writer
Friday, July 12, 2002
©2002 Associated Press

The leader of President Bush's new task force on corporate crime was a director of a credit card company that paid more than $400 million to settle charges of consumer and securities fraud.

Larry Thompson, the deputy attorney general, served on the board of the company, Providian Financial Corp., from June 1997 until he was confirmed by the Senate in May 2001, according to Securities and Exchange Commission documents.

During that period, state, local and federal agencies investigated Providian for gouging its customers, who filed class-action lawsuits against the company. Providian paid more than $400 million in 2000 to settle the investigations and lawsuits.

During the first two weeks in 1999 after the government investigations were disclosed, the company's shares plunged from $62.06 to as low as $39.22.

In March, Providian agreed to pay $38 million to settle a class-action lawsuit filed by shareholders alleging the company inflated its profits through its price-gouging practices.

The settlement covered investors who bought the company's stock between Jan. 21, 1999 and June 4, 1999, when Thompson was a company director.

The Washington Post, which first reported Thompson's connection with the credit card company, said he held 89,651 shares of Providian on March 21. Those shares were valued at more than $4.7 million on the day he took office as deputy attorney general.

Thompson was not questioned about his role at Providian during his Senate confirmation hearings.

Providian's officers and directors, including Thompson, are defendants in a class-action lawsuit brought by company employees who claim they urged large holdings of Providian stock in 401(k) retirement plans while they were employing questionable accounting methods and cashing in on their own shares.

Justice Department spokesman Mark Corallo said Thompson was proud of his service on Providian's board.

"He only became aware of the (fraud) issues when regulators began to make inquiries," Corallo told the Post. "He then personally took the lead in making the company doing the right thing."

Bush established the white-collar crime task force Tuesday amid mounting corporate scandals. He gave Thompson until July 19 to convene its first meeting. But in a surprise move, he held the first session on Friday at the White House.

At the meeting, Thompson pledged to go after corporate criminals "with vigor and an aggressive manner."

How Providian misled card holders

Bush Corporate SWAT Head Headed Providian - Paper

Reuters Company News
Saturday July 13, 2002 1:03 am Eastern Time
Source

WASHINGTON, July 13 (Reuters) - The head of President George W. Bush's corporate-crime SWAT team once was a director at a credit card company that paid more than $400 million to settle allegations of consumer and securities fraud, the Washington Post reported on Saturday.

Deputy Attorney General Larry Thompson was a board member at Providian Financial Corp. (NYSE:PVN - News) and chairman of its audit and compliance committee from 1997 until he was named to his new job in the Bush government in May 2001, the newspaper reported.

A series of financial scandals has sunk investor confidence in publicly traded stocks and rocked markets around the world. They have also threatened to become a political liability for Bush as Democrats seek to use the issue against him and against Republicans in Congress in coming November elections.

Bush himself has been criticized for taking a low-interest loan more than a decade ago from an oil company where he served as a director.

The newspaper said Thompson sold nearly $5 million worth of stock, his entire holding, in Providian to comply with ethics rules after his confirmation.

A few months later, Providian began to disclose problems with defaults in its credit card portfolio. These problems led to a collapse of its stock price and the layoffs of thousands of employees.

Providian was a big player in the subprime market, which specializes in offering credit to people with low incomes and bad credit histories. The company settled charges last year that it inflated its financial results by charging excessive fees.

Providian was also accused by state and federal regulators of breaking consumer-protection rules.

"The deputy attorney general is proud of his service on the board of Providian. He only became aware of the issues when regulators began to make inquiries," the newspaper quoted Thompson's spokesman Mark Corallo as saying.

"He then personally took the lead in making the company do the right thing and it was his personal efforts that were a driving force in the company settling over $400 million and in implementing internal reforms and compliance measures," Corallo

"He only became aware of the issues when regulators began to make inquiries,"

LOL!

I guess George couldn't find just one, just one guy in America who could head the task force that wasn't caught up in criminal activity, fraud and scandal. This was probably a clerical error.

"Today, by executive order, I create a new Corporate Fraud Task Force, headed by the Deputy Attorney General, which will target major accounting fraud and other criminal activity in corporate finance. The task force will function as a financial crimes SWAT team, overseeing the investigation of corporate abusers and bringing them to account."
George W. Bush - SOURCE.

Deputy Attorney General
Larry Thompson

"I have full confidence in Deputy Attorney General Larry Thompson and his ability to pursue this investigation."
Sen. Patrick Leahy, Democrat - Chairman, Senate Judiciary Committee. Source.

PROFILE OF LARRY THOMPSON
"President Bush's choice as the nation's top corporate crime fighter, Deputy Attorney General Larry Thompson, has spent much of his career as a private attorney defending clients from allegations of fraud and white collar crime.

...Thompson has long dealt with corporate crime, but much of that work has been as a defense attorney.

He was a partner at the Atlanta law firm of King & Spalding between 1977 and 1982, when he became a U.S. attorney in Atlanta. He rejoined King & Spalding in 1986 and remained there until he was chosen for the Justice Department position last year.

In private practice, Thompson mostly represented white-collar defendants including former Fulton County Commissioner Michael Hightower, who pleaded guilty to taking bribes from contractors, and Dan Paradies who owned an airport gift shop and was convicted on 83 counts of mail fraud and one count of conspiracy for his role in a scheme to bribe members of the Atlanta City Council. He was sentenced to 33 months.

...Thompson's old law firm has minor connections to Enron.

King & Spalding has represented Enron in several matters, including in connection with agreements for the short-term purchase of liquefied natural gas from the Middle East and Africa, according to the law firm's Web site."
[End of partial transcript]

Providian was nothing more than a loan sharking operation on a grand scale prior to and on Larry Thompson's watch.

All Thompson had to do was take a casual or cursory look at the interest rates that Providian was charging, that should have raised a red flag immediately.

Deputy Attorney General Larry Thompson was a board member at Providian Financial Corp. (NYSE:PVN - News) and chairman of its audit and compliance committee from 1997 until he was named to his new job in the Bush government in May 2001, the newspaper reported.

Providian was nothing more than a loan sharking operation on a grand scale

hey, at least all they do is whack their customers with incredibly obnoxious fees and interest rates when they don't pay on time, and sometimes even when they do (the old trick of not crediting payments in a timely manner, among others)

a real loan shark sends guido out to rearrange your face

and, they do provide a service, namely providing extremely expensive credit to those nobody else will touch, kind of like rent-to-own furniture outfits and buy-here-pay-here used car lots

it really ain't our job to protect people from their own stupidity

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