Banker Math meets the jus­tice depart­ment’s cooks

The Pak Banker - - Front Page - Jonathan Weil

ERIC Holder has said he doesn’t know if he will stay on as U.S. at­tor­ney gen­eral, now that Pres­i­dent Barack Obama has been re-elected. Here’s some­thing to help them de­cide: A story about how the Jus­tice Depart­ment got caught fudg­ing its num­bers on fi­nan­cial-fraud pros­e­cu­tions — again.

About five weeks ago, on Oct. 9, Holder held a news con­fer­ence to trum­pet the re­sults of the gov­ern­ment’s Dis­tressed Home­owner Ini­tia­tive, which he called “a ground­break­ing, year­long mort­gage-fraud en­force­ment ef­fort” and “the first ever to fo­cus ex­clu­sively on crimes tar­get­ing home­own­ers.” Holder said the mul­ti­a­gency ini­tia­tive, led by the Fed­eral Bureau of In­ves­ti­ga­tion, ran from Oct. 1, 2011, through Sept. 30 and re­sulted in 285 in­dict­ments and com­plaints against 530 crim­i­nal de­fen­dants “for al­legedly vic­tim­iz­ing more than 73,000 Amer­i­can home­own­ers.” He also cred­ited the pro­gram with 110 civil com­plaints against more than 150 de­fen­dants.

It took two days to dis­credit the fig­ures. On Oct. 11, Bloomberg News re­ported that the num­bers for the crim­i­nal cases in­cluded fraud charges against a Chicago lawyer that were filed in Oc­to­ber 2006, two years be­fore Obama was elected. The lawyer, Nor­ton Hel­ton, was sen­tenced in Jan­uary to 15 years in prison.

The Jus­tice Depart­ment at the time de­clined to re­lease a com­plete list of de­fen­dants’ names. Bloomberg iden­ti­fied the Ge­orge W. Bush-era charges from a sam­ple list of eight cases that the depart­ment did pro­vide. In 10 more cases that in­di­vid­ual U.S. at­tor­neys’ of­fices pub­li­cized in news re­leases as be­ing part of the ini­tia­tive, Bloomberg found that six of them were filed in 2009 and 2010, be­fore the ini­tia­tive be­gan.

This was the sec­ond time in two years that the Jus­tice Depart­ment used trumpedup num­bers for a me­dia event on fi­nan­cial­fraud pros­e­cu­tions. In De­cem­ber 2010, Holder held a news con­fer­ence to tout a sup­posed sweep by the pres­i­dent’s Fi­nan­cial Fraud En­force­ment Task Force called Op­er­a­tion Bro­ken Trust. (The mort­gage-fraud pro­gram was part of the same task force.) As with the lat­est ini­tia­tive, Bro­ken Trust wasn’t ac­tu­ally a sweep. It was more like pick­ing trash out of a dump. All the Jus­tice Depart­ment did was lump to­gether a bunch of small-fry, penny-ante fraud cases that had noth­ing to do with one an­other. Then it held a press gath­er­ing.

At least on that oc­ca­sion, the Jus­tice Depart­ment promptly re­leased a list of de­fen­dants’ names and case de­tails when I asked for one. That is how I was able to de­ter­mine for a De­cem­ber 2010 col­umn that the gov­ern­ment’s Bro­ken Trust num­bers were in­flated. Among the hand­ful of cases on the list that I spot-checked, one de­fen- dant was sen­tenced to pro­ba­tion be­fore the op­er­a­tion’s sup­posed start date. An­other per­son on the list had no record of crim­i­nal charges. Other cases clearly had noth­ing to do with any ac­tions by the task force.

I asked the Jus­tice Depart­ment for its Dis­tressed Home­owner Ini­tia­tive list the week af­ter Bloomberg’s Oct. 11 story ran, and I have been ask­ing ever since. The agency’s lead­ers and spokes­men should have had the list at their fin­ger­tips when they made their claims. To date, the agency hasn’t given me a copy af­ter promis­ing mul­ti­ple times to do so.

In an Oct. 19 e-mail, a Jus­tice Depart­ment spokes­woman, Adora Andy, said: “We’ll have a list to you — it will take some time to pull it to­gether.” On Oct. 26, Andy said: “You will get a list,” ex­plain­ing that “this is a la­bor-in­ten­sive process.” On Nov. 5, she said: “It looks like we should have the list to you by the end of the week if not sooner.” The week came and went, with no list. On Nov. 13: “Hold tight. Fi­nal­iz­ing things on this end. Should have some­thing to you tonight.” Again, no list. “I as­sure you I’m work­ing as hard as I can to get this to you along with the lead agency on this mat­ter, FBI,” she said later that day. “It’s just very la­bo­ri­ous with so much go­ing on and so lit­tle staff.” Ac­cord­ing to last month’s Bloomberg ar­ti­cle, a spokesman for the FBI, Wil­liam Carter, said some cases that be­gan be­fore Oc­to­ber 2011 were in­cluded in the num­bers be­cause some type of law-en­force­ment ac­tion — in­clud­ing sen­tenc­ings — had oc­curred dur­ing the year­long pe­riod. In other words, the gov­ern­ment en­gi­neered the cri­te­ria to show as many cases as pos­si­ble, not­with­stand­ing Carter’s state­ment at the time that there was “no at­tempt to fudge the num­bers.”

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