Banker Math meets the justice department’s cooks
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.”