Entries in Department of Justice (11)


Will Judge Go Rogue, Reject DOJ Settlement with HSBC?

Simon Dawson/Bloomberg via Getty Images(NEW YORK) -- There could be a hitch in the Justice Department's controversial decision not to prosecute Europe's largest bank over allegations it laundered money for Mexican drug gangs, rogue states and terrorist money men.

To the surprise of some experts, a federal judge has so far refused to sign off on an agreement reached three months ago between federal prosecutors and the Britain-based bank HSBC.  Despite what prosecutors said was a mountain of evidence of illicit money transfers, the deal enabled HSBC to avoid a potentially crippling criminal prosecution.  Instead, HSBC agreed to pay an unprecedented $1.92 billion in fines.

While the Justice Department brokered the deal, it can't go through without the approval of U.S. District Court Judge John Gleeson.

"It does not seem likely that the judge would have taken this much time if he was not at least thinking hard about whether to accept the agreement," said Duke University Law Prof. Sam Buell, a former federal prosecutor.

The Justice Department decision to allow the bank to avoid criminal sanctions has been pilloried by lawmakers.  Sen. Jeff Merkley, an Oregon Democrat, accused the Justice Department of creating a "prosecution free zone" for big banks.

Lawmakers said they were particularly irritated by suggestions from Attorney General Eric Holder and other senior Justice officials that the government avoided prosecuting the bank because doing so had the potential to destabilize the economy.  That assertion led lawmakers to question whether banks as large as HSBC are "too big to prosecute."

"If you're caught with an ounce of cocaine, the chances are good you're going to jail," said Sen. Elizabeth Warren (D-Mass.).  "Evidently, if you launder nearly $1 billion for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night."

In a December court hearing in New York, Gleeson asked lawyers for the Justice Department and HSBC to provide him their arguments for him to approve the deal.

"My suggestion is you present to the court a document that demonstrates why I should accept the agreement," Gleeson said, according to published reports. "There's been some publicized criticism of this.  I think you should feel free to address it."

In January, each side presented the judge with written arguments defending the deal, known as a deferred prosecution agreement.  In the government's 20-page filing, federal prosecutors argued that the deal "was carefully tailored to punish the defendants and deter future misconduct of others."  It also repeated the assertion that a criminal prosecution could result in "collateral consequences, including … disproportionate harm to shareholders, pension holders, employees, and others not proven personally culpable."

The bank, in turn, argued that a deal is a deal.  HSBC lawyers wrote that the bank has already paid a steep price -- publicly admitting to wrongdoing and suffering "unusual reputational harm" as a result.

"The government must be held to its obligations," the filing says.

ABC News left messages for HSBC lawyers and the Justice Department seeking comment but did not receive a response.

Buell said both sides make legitimate points, and added that the Justice Department would be placed in a tough spot if the judge rejects the agreement.  But because criminal charges are still pending against HSBC, Buell said, the judge still has the power to reject the deal and force the government to move ahead with a prosecution or propose a different deal.

Gleeson has not signaled which way he will rule.  He issued an order in mid-February stating only that "the Court has not yet approved or disapproved the proposed agreement disposing of the case.  The application for approval of that agreement has been taken under advisement."

Copyright 2013 ABC News Radio


Standard Chartered to Forfeit $227M to DOJ over Illegal Transactions

Hemera/Thinkstock(NEW YORK) -- Standard Chartered has agreed to pay hundreds of millions of dollars in fines for transactions involving clients in Iran, Sudan, Libya and Burma.

The British banking giant broke New York state banking laws by moving money through the U.S. financial system on behalf of clients based in these countries -- a violation of American sanctions.

Prosecutors called Standard Chartered's conduct "flagrant and unacceptable."  They said the business should have been rejected.

Court records said the bank told customers living in Iran or the other sanctioned countries to use a London banking code or otherwise conceal the true nature of the transactions.

Standard Chartered has agreed to forfeit $227 million to the Justice Department.

Copyright 2012 ABC News Radio


New Mexico Ex-FBI Employee Says Co-Workers Were 'Jealous' of Her, Sues Employer

Hemera/Thinkstock(NEW YORK) -- Erika Bonilla, a professional singer and former FBI employee in New Mexico, is suing the FBI for harassment and discrimination, saying several co-workers were "jealous of her appearance and Latin singing career."

Bonilla, 38, began working at the FBI field office in Albuquerque, N.M., in December 2002. In the summer of 2007, Bonilla was promoted to an Administrative Specialist, "which entailed human resources management, language testing, applicant testing and recruiting matters," according to the lawsuit filed with the U.S. District Court in New Mexico.

Bonilla's suit, filed on June 18, names Attorney General Eric Holder and the Department of Justice, which oversees the Federal Bureau of Investigation.

The suit states she "was targeted, harassed and retaliated against because she is an attractive Hispanic female with a career in Latin music."

Bonilla is a professional Latin music singer, has released an album and signed a recording contract for a second album.

"She has performed at various FBIHQ functions," which the "FBI is well aware of, and allows her to work as a singer," the suit states.

The lawsuit was brought "to prevent [the FBI] from maintaining a policy" of discriminating against Bonilla, who now lives in California. She is requesting unspecified damages, back pay, "and other equitable relief" for discrimination on the basis of race and gender. She says she should be protected from retaliation for protected activity under Title VII of the Civil Rights Act of 1964.

A spokesman for the FBI declined to comment and referred ABC News to the Justice Department. Charles Miller, a spokesman for the Department of Justice declined to comment on ongoing litigation.

"Ms. Bonilla indicated this harassment included maliciously false rumors, disparate treatment and frivolous complaints that caused her anguish and lost pay," said Monnica Garcia, Bonilla's attorney. "This lawsuit was brought because, despite her repeated complaints to management, the agency failed to address the hostile work environment. Ms. Bonilla hopes this lawsuit will not only compensate her for her damages, but also prevent future acts of discrimination and retaliation."

Copyright 2012 ABC News Radio


Apple Pushes Back on E-Book Pricing Charges

Kevork Djansezian/Getty Images(NEW YORK) -- On Tuesday, the Department Justice announced it was suing Apple and major e-book publishers for collaborating and fixing e-books prices.  At the time, Apple did not have a comment on the government suit, but late Thursday night, the computer electronics giant issued a statement to All Things D.

“The DOJ’s accusation of collusion against Apple is simply not true.  The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry,” Apple’s Tom Neymaur told the website.  “Since then customers have benefited from eBooks that are more interactive and engaging.  Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.”

Apple provided the same statement to ABC News, but declined to elaborate.

While three publishers -- Harper Collins, Hachette, and Simon & Schuster -- settled with the Department of Justice after the suit was filed and agreed to reimburse customers in some cases, Apple, MacMillan and Pearson’s Penguin Group have not settled.  If the statement is any indication, Apple plans to fight the suit.

The Department of Justice alleges that during 2009, executives at the highest levels of the named companies worked together to eliminate competition among stores selling e-books, namely Amazon and its $9.99 e-book pricing model.

However, Antitrust Division Acting Assistant Attorney General Sharis Pozen has been clear that this will be an ongoing fight.

“We will pursue vigorously our claims against those companies to ensure that consumers get the full benefits of the competition they deserve.  We are taking action to stop what was an illegal conspiracy,” said Pozen.

Copyright 2012 ABC News Radio


U.S. Senators Ask Justice Department to Investigate Employers Who Request Facebook Passwords

Comstock/Thinkstock(NEW YORK) -- Two U.S. senators are asking the U.S. Justice Department to determine whether employers who request the Facebook login information of potential employees are violating federal law, Bloomberg News reports.

Sen. Charles Schumer (D-NY) and Sen. Richard Blumenthal (D-Conn.) will also ask the U.S. Equal Employment Opportunity Commission to investigate the practice. The announcement follows a statement issued on Friday by Facebook Chief Privacy Officer Erin Egan, which discouraged employers from asking job applicants for their Facebook usernames and passwords.

The two senators said the practice may violate federal anti-hacking statutes.

Copyright 2012 ABC News Radio


Feds Announce $25B Foreclosure Abuse Deal

Office of the Maine Attorney General(WASHINGTON) -- Government officials announced on Thursday a record $25 billion settlement with the five biggest banks related to foreclosure abuses, including "robo-signing" of documents.

Among the money allocated will be $1.5 billion distributed nationwide to about 750,000 borrowers who lost their homes to foreclosure. The deal is the largest multi-state settlement since the Tobacco Settlement in 1998, the Department of Justice said.

Five banks -- Wells Fargo, Bank of America, Citigroup, JPMorgan Chase and Ally Financial -- will also have to "work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide," and "provide up to $3 billion in refinancing relief nationwide," according to the settlement.

Attorney General Eric Holder said the deal by 49 state attorneys general, who worked late into the hours of Wednesday night, does not preclude states from pursuing their own suits against the banks.

Holder announced further terms of the deal would be on a website,, and residents of the states involved should visit the sites of their respective attorneys general.

Department of Housing and Urban Development Secretary Shaun Donovan said the settlement holds banks accountable for abuses against homeowners, which "continued long after people got the keys to their new home."

"No more lost paperwork, no more excuses, no more rhetoric," Donovan continued.

Donovan said the investigation comprised at least 15,000 hours of reviewing thousands of files of Federal Housing Administration insured loans.

Copyright 2012 ABC News Radio


Washington Spending: No $16 Muffins

iStockphoto/Thinkstock(WASHINGTON) -- Remember those $16 government muffins that outraged critics of Washington spending? Turns out, there’s no such thing.

After Hilton Hotels denied reports that it charged $16 per muffin to the Department of Justice at a 2009 conference, the Department of Justice said the $16 fee included much more than muffins.

“Under a complete accounting of the services provided for the Executive Office for Immigration Review conference, it is clear that the muffins did not cost $16,” DOJ spokeswoman Gina Talamona said in a written statement. “The abbreviated banquet checks did not reflect all of the food and services provided. The package consisted of food, beverages, staff services and function space, including a 450-seat ballroom and more than a dozen workshop and breakout rooms each of the five days of the conference.”

The Justice position on the $16 paying for multiple items, not just muffins, squared with a Hilton spokesman’s claim to ABC News.

“Dining receipts are often abbreviated and do not reflect the full pre-contracted menu and service provided,” a Hilton statement said, “as is the case with recent media reports of breakfast items approved for some government meetings. In Washington, the contracted breakfast included fresh fruit, coffee, juice, and muffins, plus tax and gratuity, for an inclusive price of $16 per person.”

Without the tax and tip, a spokesman noted, the cost of the continental breakfast was $14 per person.

The melee over the muffins went viral this week, with presidential candidates, politicians and the public citing the cost of muffins a new symbol of government waste.

The original report on the muffin costs came from the Justice Department’s Office of Inspector General, which reviewed spending for the Executive Office for Immigration Review (EOIR) Legal Conference in August, 2009.

The IG reports said “the EOIR spent nearly $40,000 on refreshments at the conference. The service and gratuity charges applied to each bill equaled 20 percent of the total price of refreshments. Applying the 534-attendee figure to the total cost of refreshments over the five days of the event, EOIR spent an average of $14.74 per person per day on refreshments.”

On Friday, a spokesman for the Justice Department inspector general said, “We stand by our report.”

But Hilton suggested the inspector general did not dig deeply enough. If the IG had followed up and asked the hotel for details, it would have found out that the $4,200 covered a full continental breakfast for each person, at a price that was competitive for most full-service hotels.

But the gnashing of teeth within the federal government had already started. Vice President Joe Biden criticized the cost of muffins, and the White House budget office responded with a memo directing federal agencies to review policies associated with conference expenses.

Copyright 2011 ABC News Radio


Online Poker Site Full Tilt Running Ponzi Scheme, DOJ Says

Comstock Images/Thinkstock(WASHINGTON) -- The online gambling site Full Tilt Poker, shut down in April by federal authorities, was running a $440 million Ponzi scheme, the Justice Department announced Tuesday, filing new charges against the directors of the company.

“Full Tilt was not a legitimate poker company, but a global Ponzi scheme,” Preet Bharara, the U.S. Attorney for the Southern District of New York, said in a statement.

The site told players their gambling accounts were secure and available for withdrawal at any time when in fact, “Full Tilt Poker did not maintain funds sufficient to repay all players,” Bharara said.   The operation allegedly used player funds to pay board members and other owners more than $440 million since April 2007.

The complaint names board members Raymond Bitar, Howard Lederer, Christopher Ferguson and Rafael Furst as defendants.  Calls to Full Tilt Poker seeking comment were not immediately returned.

“Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company,” according to the DOJ statement.

On April 15, 2011, the Justice Department filed a complaint for money laundering, fraud, and violating the 2006 Unlawful Internet Gambling Enforcement Act against 11 individuals who ran PokerStars, Full Tilt Poker and Absolute Poker.

The Justice Department’s shutdown of online poker sites has affected millions of poker players and the poker industry.

In June, Phil Ivey, one of the world’s best poker players, announced he was suing his sponsor, Full Tilt, in June for $150 million and boycotted this year’s World Series of Poker.

Copyright 2011 ABC News Radio


DOJ Investigating Standard & Poor's Ratings of Mortgage Securities

Scott Eells/Bloomberg via Getty Images(WASHINGTON) -- Credit rating agency Standard & Poor's is in possible trouble with the Justice Department about whether its ratings of dozens of mortgage securities were deliberately inaccurate, in turn contributing to the near meltdown of the financial industry in September 2008.

The action comes on the heels of S&P's decision earlier this month to lower the AAA rating of the U.S., which sent Wall Street into a tailspin.  However, the Obama administration's decision to conduct an investigation into S&P's rating of mortgage securities began before the downgrade.

Specifically, the government is looking into reports that S&P business managers overruled the findings of company analysts who wanted to downgrade the ratings of mortgage bonds.

In the years leading up to the collapse of the housing market, S&P and other agencies made huge profits on their high ratings of bundled mortgages, which valued them far more highly than their actual worth.

S&P could be in hot water if the Justice Department determines that its analysts put their company's business concerns ahead of their supposed independent evaluations.  However, criminal charges are unlikely, although a civil suit is possible.

Copyright 2011 ABC News Radio


DOJ to Slash Spending In Attempt to Avoid Furloughs

Photo Courtesy - Getty Images(WASHINGTON) -- Attorney General Eric Holder sent a memo to Justice Department employees last week saying he has ordered a hiring freeze and is asking the FBI, ATF, DEA and U.S. Marshals Service to curb non-personnel spending.

In his memo, Holder notes that the government is currently being funded until March 4 under a continuing resolution that keeps funding under last year's levels. Holder says the measures being implemented will help the department avoid the possibility of "more severe measures such as staff furloughs."

The Justice Department's budget request for the current fiscal year included a 5.4-percent funding increase, with over 2,800 employees being added to the department's workforce.

According to Justice Department officials, the measures include canceling non-essential travel and attending conferences. The Department's missions for counterterrorism and anti-drug operations are not expected to be affected.

Copyright 2011 ABC News Radio

ABC News Radio