I am a 53 year old teacher. I have double major in Speech and Criminal Justice resulting in a Bachelor's degree from Northeastern State University in Oklahoma and a law degree.
Eric Holder Admits Some Banks Are Just Too Big To Prosecute
When the Attorney General of the United States admits some banks are simply too big to prosecute, it might be time to admit we have a problem — and that goes for both the financial and justice systems.
Eric Holder made this rather startling confession in testimony before the Senate Judiciary Committee on Wednesday, The Hill reports. It could be a key moment in the debate over whether to do something about the size and complexity of our biggest banks, which have only gotten bigger and more systemically important since the financial crisis.
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,” Holder said, according to The Hill. “And I think that is a function of the fact that some of these institutions have become too large.”
Holder’s comments don’t come as a total surprise. His underlings had already made similar confessions to The New York Times last year, after they declined to prosecute HSBC for flagrant, years-long violations of money-laundering laws, out of fear that doing so would hurt the global economy. Lanny Breuer, formerly in charge of doling out the Justice Department’s wrist slaps to banks, told Frontline as much in the documentary “The Untouchables,” which aired in January.
I have said several times before that there are two standards of justice in this country. If you had any doubts as to the truth of that statement, this should end them.
It is a sad day when certain corporations have essentially gained the powers and immunities of sovereign states.
What horrors, what crimes, are we yet to suffer, when the law cannot protect us?
Swartz Charged with Many Crimes to Force Guilty Plea
Aaron Swartz: Eric Holder calls Aaron Swartz case “a good use of prosecutorial discretion.”
Earlier this morning, the Senate Judiciary Committee grilled Attorney General Eric Holder on topics ranging from drones to marijuana policy. About an hour into the oversight hearing, Sen. John Cornyn, a Republican from Texas, asked Holder about the DOJ’s prosecution of Aaron Swartz, the programmer and Internet activist who committed suicide in January. Among other things, Swartz had been charged under the Computer Fraud and Abuse Act for using MIT’s computer network to unauthorizedly download millions of academic journal articles from a subscription database called JSTOR. He was facing a maximum sentence of 50 years in prison.
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The DOJ may have only intended for Swartz to go to jail for a couple months. It’s clear, though, they would’ve had no problem with sending him away for a few years, too. I think Sen. Cornyn put it nicely: “If you’re an individual American citizen, and you’re looking at criminal charges being brought by the United States government, with all of the vast resources available to the government, it strikes me as disproportionate, and one that is basically being used inappropriately, to try to bully someone into pleading guilty to something that strikes me as rather minor.”
Holder claimed that the Department of Justice had conducted “a good examination” of the Swartz prosecution, and came away from it satisfied that there had been no prosecutorial misconduct. And maybe there wasn’t, if you’re judging the prosecutors on whether they deviated from standard DOJ practice. But there is a flaw in the system if the DOJ’s best route to get the sentence it’s looking for is to threaten defendants with disproportionate prison terms. That might be an effective prosecutorial tactic, but that’s not justice.
So, a federal prosecutor stacks charges on what should be a single offense in order to get someone to plead guilty. Is that justice? Does it bear any resemblance to justice?
Swartz had a strong defense but by the stacking the charges the feds had placed him in a situation where if he lost he could serve fifty years.
It sounds to me that if you wanted to, as a federal prosecutor, you could force people to settle even if they were innocent – just stack the charges so that the risk of losing will put in jail for decades then offer a few months. You generate another trophy for that wall and don’t actually have to go to court and take your case to a jury.
That’s not justice, it’s just a use of overwhelming government resources to force the win.
Tell me, if I put you in a situation like Swartz where you could serve up to fifty years in prison and they offer you three to six months, and you have done nothing, would you take the deal?
Are you willing to rely on your innocence in court, and risk fifty years? You have to think about it, don’t you?
Let’s make it a little tougher. You can’t afford your own attorney and the government is willing to spend several million dollars and thousands of hours investigating you. Every corner of your life will be turned upside down. You’ll go bankrupt from fees. You probably won’t be able to hold a job because of the regular court appearances and your reputation just went through the shredder.
Do you still want to plead innocent or will you take the three months just to make it stop?
Information is power. But like all power, there are those who want to keep it for themselves. The world’s entire scientific and cultural heritage, published over centuries in books and journals, is increasingly being digitized and locked up by a handful of private corporations. Want to read the papers featuring the most famous results of the sciences? You’ll need to send enormous amounts to publishers like Reed Elsevier.
There are those struggling to change this. The Open Access Movement has fought valiantly to ensure that scientists do not sign their copyrights away but instead ensure their work is published on the Internet, under terms that allow anyone to access it. But even under the best scenarios, their work will only apply to things published in the future. Everything up until now will have been lost.
That is too high a price to pay. Forcing academics to pay money to read the work of their colleagues? Scanning entire libraries but only allowing the folks at Google to read them? Providing scientific articles to those at elite universities in the First World, but not to children in the Global South? It’s outrageous and unacceptable.
Not only was Swartz a computer science genius, he was also heavily devoted to freedom of information—which is where he found himself getting into trouble. His friend, journalist and science fiction novelist Cory Doctorow, says he was a “full-time, uncompromising, reckless and delightful shit-disturber.” His first target was PACER.gov, a website that provides court documents to the public for a small fee (about 8 cents per page). In 2008, Swartz, funded by his own money, single-handedly moved the information on to a public website. He released over 18 million pages, an estimated total value of 1.5 million dollars. The FBI investigated the situation, but no charges were filed against him.
Shortly after, Swartz founded DemandProgress.org, a website devoted to internet activism. The website was integral in taking down the Stop Online Piracy and the Protect IP Acts of 2011, two bills which allowed the government more control over what could and could not be posted and shared on the internet (they deserve their own blog post—next week, perhaps).
What got him into conflict with the judicial system, after some earlier and less significant jostles, was breaking into M.I.T. computer networks in 2010 and 2011, to access JSTOR and to download documents from there. It was apparently meant to be a demonstration, to underline his case that documents like JSTOR’s should be freely available. It had long been argued that such documents should be free because they are produced at public expense, writes the New York Times. The NYT has a detailed account of Swartz’ JSTOR activity. The indictment says that JSTOR’s servers were brought down by his action on several occasions, Wired wrote in September 2012.
It’s apparently a Computer Fraud and Abuse Act (CFAA) which was applied by federal prosecutors. The 9th U.S. Circuit Court of Appeals, in limiting reach of the CFAA, said that violations of employee contract agreements and websites’ terms of service – crucial in Swartz’ case, apparently, at least if up to the prosecutors – were better left to civil lawsuits, also according to Wired. But this ruling wasn’t binding for Massachusetts, and the prosecutors insisted that their charges against Swartz should go on. The maximum penalty – potentially – could have amounted to 35 years in prison, and a million USD penalty. The chief prosecutor in charge was Steve Heymann, who had previously brought hacker Albert Gonzales into jail with a 20-year term.
Defenders of the Justice Department say that a criminal conviction could have been a death penalty for the bank, causing widespread damage to the economy. Warren wanted to know why the death penalty wasn’t warranted in this case.
“They did it over and over and over again across a period of years. And they were caught doing it, warned not to do it and kept right on doing it, and evidently making profits doing it,” Warren said of HSBC. “How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”
How can you teach business ethics with a straight face in this kind of environment? A bank participates in the systematic subversion of a friendly government, makes billions of dollars and is then fined a small proportion of its profits.This is not an
example you want to lead with in an ethics lecture in a business class. In fact, it’s not something you want to think about too hard while trying to make moral decisions. Anybody who uses the nonsensical argument, “Everybody does it,” just got enough ammunition for years of abuse. What are the rest of us supposed to do?
We could start by marveling at the idea that any rational human being could contemplate a fine as a penalty for international subversion? This subversion involved laundering money so it could be used anywhere in the economic system, thus, making it available to pay for bribes, drug smuggling, murder and kidnapping.
We could wander casually over to our second problem which is bankers, especially the international and investment variety, and wonder what made them so special? It is a simple matter to document one law for them and one law for the rest of us. That is the why Ms. Warrent’s example hits home. We are living by two sets of laws, one harsh and punitive and another for the banks.
Let us conclude with out third problem, where do get off allowing banks to attack foreign governments? Can there be any doubt in anyone’s mind that laundering billions in drug cartel money is the equivalent of a direct attack on the nation of Mexico and a more minor, by comparison, attack on this country, the United States?
It might be better if instead of thinking of the HSBC bank as a financial institution but more as a hostile foreign power willing to exploit our financial system for profit. I believe that is a more accurate reading of how it views its status in the world.
I don’t think Mexico feels safer after we fined HSBC. They may not feel that we have sent a message to those who would empower those who actively kidnap and murder in their country?
How would you feel about this if you lived in Mexico? Does it make you feel secure in American protection anywhere on earth?
Global Ethics Forum: Power, Inc.: The Epic Rivalry Between Big Business & Government – YouTube
David Rothkopf
Garten Rothkopf CEO David Rothkopf talks about the conflict between big business and government.
“He explains that we are in a crisis. There has been a net loss of jobs in this country over the last ten years. Social mobility is declining. Inequality is increasing. Our democratic system is under threat by massive corporate power because of the Supreme Court’s decision in Citizen’s United that perverts the right of free speech to include money.
What gives the average citizen a voice? that would be the government. Government is a leveler.
Historically the battle between church and state was the last big battle on the same scale as this one. It was not really a battle over religion. It was an economic battle – who had the authority to tax.
The one country that has done the most to empower corporations is the United States. This country is born of the industrial era.
Even early on corporations had an outsize influence. In the Dartmouth college case, the Supreme Court decided that states could not revoke charters once granted essentially giving corporations immortality.
Later we saw the courts use the 14th amendement for its first fifty years arguing the corporations should have the same rights as people. Yet people are not immortal. People do not possess legions of lawyers to get laws passed.
Today, most of the value bearing instruments are created by the private sector mainly derivatives. Only about five major powers are able to have currencies on their own.
Nations unable to compete with corporations in terms of power should be considered semi-states.
Markets don’t promote competition (read Adam Smith) efficiency is achieved by scale.
The current size of corporations is larger than could have been imagined in the past. Fundamental shifts in power are occurring.
More than half people on the ground in our last two wars were private contractors
In America – the political process is corrupted by money and Internationally – no institutions capable of dealing with this issue exist.
We need to ask ourselves – What produces the kind of society we aspire to?
As the economic center of gravity moves so does the intellectual center. Right now that center is moving to Asia.
Government is the only way the average person has a seat at the table. ”
(Forgive my poor summary – I wrote notes as it went along.)
A Challenge for My Students (and other faculty should they so desire!)
My students are well aware by this time that I am a mystery buff. I love solving television mysteries and real life ones as well. The video below is from You Tube and it features a Miss Marple mystery. These are my favorite mysteries because you have all the clues you need to solve it by the time she arrives at the explanation. I haven’t solved all of the Miss Marple stories but certainly more than 2/3rds. This one beat me.
So, my challenge is, “Can you solve the mystery before our heroine explains the outcome?” You are, of course, on your honor not to cheat. So, don’t be going to one of those spoiler web sites or reading the novel before watching the program. You can do what I like to do in these cases which is to pause the film and think about the evidence at hand. Television watching appeals to the unconscious more than the conscious and if you just let it flow, the “little grey cells” (another Agatha Christie character) never get to operate at full power.
This exercise builds your power of reasoning and deduction known by the classic word, ratiocination.
If you solve it, make a comment and I will post the winners later.
James Pilant
P.S. I am going to give you a clue that I did not have. I did not figure out the murder because I could not conceive that the murderer(s) could be so evil. And I was revolted when I found out what had been done. jp
Agatha Christie’s Marple: S1E1 – The Body In The Library – YouTube
Fracking and the Revolving Door in Pennsylvania | Public Accountability Initiative
Numerous top government officers and environmental regulators in Pennsylvania have either left their public jobs for careers in the oil and gas industry or come to government from the industry.
The revolving door trend in Pennsylvania raises questions about whether regulators are serving the public interest or private industry interests in their oversight of fracking.
The following are major findings from the report:
Pennsylvania’s previous three governors have strong ties to the natural gas industry. Tom Ridge’s firms benefited from a $900,000 contract to lobby for the Marcellus Shale Coalition, Mark Schweiker joined a lobbying firm with a Marcellus Shale practice, and Ed Rendell is a partner in a private equity firm invested in fracking services companies and recently lobbied on behalf of driller Range Resources. Current governor Tom Corbett also has strong ties to the industry – he received more than $1 million in campaign contributions from the oil and gas industry and previously worked as a lawyer for Waste Management, which is active in the Marcellus Shale.
Every Secretary of Environmental Protection since the DEP was created has had ties to the natural gas industry. Jim Seif is now a principal and energy consultant at Ridge Global LLC, one of former governor Ridge’s firms that lobbied for the Marcellus Shale Coalition; David Hess is now a lobbyist at Crisci Associates and has gas industry clients; Kathleen McGinty has served on the boards of two energy companies, is managing director of a consulting firm that is part of the Marcellus Shale Coalition, and is a partner in former Governor Rendell’s private equity firm; John Hanger is now special counsel to a law firm that represents every segment of the natural resources industry; and Michael Krancer is former general counsel at a utility that relies on natural gas and a former partner at a law firm member of the Marcellus Shale Coalition.
You should read the whole report – here. (pdf. file)
There are many people who find this practice of moving from the government to private industry and back again to not be a problem. I don’t get it. How is it moral to develop expertise in industry wrong doing to use it against the government later? How is it moral to work for companies that are heavily dependent on the government for profits, and then switch to government service with every prospect of returning to an extremely lucrative salary with that same industry?
Why don’t we just call it, “slow bribery?” You don’t get the money up front, you get in exchange for services provided over time.
This is how regulatory capture works. This is how public servants can cash in. This is how influence is sold for hard cash.
Bob The Businessman: An American Success Story | Crooks and Liars
This is the story of Bob the businessman.
Suppose a local businessman, let’s call him Bob, went around town raising money from the townspeople to open a car dealership. Dozens and dozens of people in town invested, putting in $1,000, $5,000, and a few putting in as much as $50,000 and $100,000. Bob raised a lot of money for his business.
After a while the investors found out Bob the Businessman was using some of their money to help his brother run for Mayor and several cousins to run for city council, and …
This is a fairy tale from the web site, Crooks and Liars. It is, of course, a parable about American business. It’s pretty funny although if you think about it, it’s very sad. Please go to the web site, and read the whole thing.
White House Grants Aaron Swartz’s Wish: Taxpayer-Funded Research Will Be Free
Aaron Swartz, a well-known Internet activist who killed himself last month, believed that information should free, not digitized and put behind pay walls.
“The world’s entire scientific and cultural heritage, published over centuries in books and journals, is increasingly being digitized and locked up by a handful of private corporations,” he once wrote.
The Obama administration just granted his wish — at least as it pertains to research funded by taxpayers.
The White House directed federal agencies on Friday to make the results of federally-funded research freely available to the public within one year of publication. The new policy came “>after more than 65,000 people signed a petition asking for expanded public access to the results of studies paid for by taxpayers.
“Americans should have easy access to the results of research they help support,” John P. Holdren, the president’s senior advisor on science and technology, said in a memo announcing the new open-access policy.
Well, it’s something but it can become so much more. Swartz wanted to free up information for the use of all mankind. This is a step in the right direction. We can build a world of free information free of corporate or government control. We owe it to Aaron to fight hard for a better Internet, a better world.
Justice Department’s New Get-Tough Policy Is, Well, Not | Matt Taibbi | Rolling Stone
I get that regulators are worried about job losses. They should be. But the long-term job losses are going to be much greater when investors around the world lose confidence in the U.S. financial system because they recognize that individuals do not face punishment for criminal activity. The individual incentive not to commit crime on Wall Street now is almost zero. Even the worst of the worst – like, say, a certain unindicted co-conspirator in an evolving insider trading case – is only threatened with individual prosecution after years of monstrous and obvious market manipulation, resulting in massive profits that he’ll almost certainly get to keep most of, by the way, if previous settlements are any guide.
It continually amazes, the way all of these law-and-order types are so willing to pontificate about the importance of taking individual responsibility for one’s actions, until the guy in their crosshairs is someone he/she went to college with, or a former client of his or her law firm. Then, suddenly, their idea of drastic justice becomes maybe yanking the license of a foreign subsidiary.
Two standard of justice exist in this country. One for those in the government and the higher circles of income and influence and another for the “common” people. If you have been following my blog for the last few years, you will encounter wrong doing among the banking fraternity and the government going unpunished on a regular basis. When there is some justice, it is almost pathetic how little penalty the investment banks and their enablers face.
But study crime in the United States, and you will note vast penalties handed out for very small crimes indeed particularly drug crimes. My personal favorite is the woman doing fifteen years for a third possession of marijuana. This is what passes for justice.
This poem is from the 17th Century.
The law locks up the man or woman
Who steals the goose off the common
But leaves the greater villain loose
Who steals the common from the goose.
The law demands that we atone
When we take things we do not own
But leaves the lords and ladies fine
Who takes things that are yours and mine.
The poor and wretched don’t escape
If they conspire the law to break;
This must be so but they endure
Those who conspire to make the law.
The law locks up the man or woman
Who steals the goose from off the common
And geese will still a common lack
Till they go and steal it back.
Banks Too Big for Justice
Pilant's Business Ethics Blog 
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