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Entries in DOJ (3)

Thursday
Aug092012

DOJ Will Not Prosecute Goldman Sachs in Financial Crisis Probe

Andrew Harrer/Bloomberg via Getty Images(WASHINGTON) -- The Justice Department has decided it will not prosecute Goldman Sachs or its employees for their role in the financial crisis, following an investigation by senators Carl Levin, D-Mich., and Tom Coburn, R-Okla. The congressional investigation found problems with the credit rating agencies and poor oversight from regulators, and highlighted abuses by Goldman Sachs and other large investment banks. Senator Levin sent a formal referral to the Justice Department for a criminal investigation in April 2011.

The investigative report by the Senate’s Permanent Subcommittee on Investigations, chaired by Levin, found that Goldman Sachs, "used net short positions to benefit from the downturn in the mortgage market, and designed, marketed, and sold CDOs in ways that created conflicts of interest with the firm’s clients and at times led to the bank's profiting from the same products that caused substantial losses for its clients."

A statement from the Department of Justice (DOJ) issued late Thursday evening noted, "Based on the law and evidence as they exist at this time, there is not a viable basis to bring a criminal prosecution with respect to Goldman Sachs or its employees in regard to the allegations set forth in the report."

"The department and its investigative partners conducted an exhaustive review of the report and its exhibits, independently gathered and scrutinized a large volume of other documents, and tenaciously pursued potential evidentiary leads, including conducting numerous witness interviews," the Justice Department’s statement continued. "While the department and investigative agencies ultimately concluded that the burden of proof to bring a criminal case could not be met based on the law and facts as they exist at this time, we commend the hard work of those involved in preparing the report and thank the Senate’s Permanent Subcommittee on Investigations for its cooperation in regard to the criminal investigation."

"We are pleased that this matter is behind us," Goldman Sachs spokesman David Wells said when contacted by ABC News.

The Justice Department statement noted that if additional information emerges, the cases could be prosecuted in the future.

This most recent decision follows other high-profile investigations that DOJ decided not to prosecute: There was the collapse of AIG and the role of the top executive at AIG Financial Products division, Joseph Cassano, and former Countrywide CEO Anthony Mozillo, who was fined by the Securities and Exchange Commission (SEC) in an insider trading case. Citibank and JP Morgan both had multi-million-dollar settlements with the SEC over collateralized debt obligations, or CDOs, tied to the U.S. housing market, but DOJ has not brought any criminal cases. Freddie Mac was subpoenaed in a grand jury investigation in 2008 but the firm disclosed in an Aug. 8, 2011, SEC filing that the Justice investigation was closed.

Attorney General Eric Holder defended the Justice Department’s record in pursuing high profile financial fraud cases. "There have been, I guess, 2,100 or so mortgage-related matters that we have brought here at United States Department of Justice. Our state counterparts have done a variety of things. The notion that there has been inactivity over the course of the last three years is belied by a troublesome little thing called facts," he said.

Goldman has faced stiff penalties from the SEC. In April 2010 the agency filed a civil charge against Goldman Sachs and Fabrice Tourre, a vice president, for making misstatements and omissions from financial records in connection with CDOs that Goldman Sachs marketed to their investors. CDOs played a significant part in the financial crisis in 2008.

ABACUS 2007-AC1 was tied to the performance of subprime residential mortgage-backed securities and was composed of  investment choices hedge fund manager John Paulson had a financial interest in selecting, although Tourre never disclosed to potential investors that Paulson & Co. had a short-interest position in seeing ABACUS go down. Investors in ABACUS allegedly lost an estimated $1 billion.

Goldman Sachs reached a settlement with the SEC in July 2010, paying a $550 million fine for admitting that they should have included information about Paulson’s investment position. Tourre is currently in ongoing litigation with the SEC over the case.

Copyright 2012 ABC News Radio

Wednesday
Sep212011

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

Monday
Feb072011

FBI and DOJ Investigate NASDAQ Computer Hacking

Photo Courtesy - Getty Images(NEW YORK) -- NASDAQ released a statement Monday confirming the intrusions into their Director’s Desk program, which was reported by The Wall Street Journal over the weekend.  The investigation into who installed malware onto the system has been ongoing for over a year.

According to law enforcement officials, the investigation was initiated by the U.S. Secret Service but is now being headed by the FBI’s Cyber Division at FBI Headquarters. The Justice Department’s Computer Crimes and Intellectual Property Section is also involved in the ongoing investigation. 
 
Officials are unsure who installed the programs and what their intent was, but there is speculation the program allowed the designers of the software to see what items and messages were being shared via the Director Desk platform.

The NASDAQ’s stock trading computers were not breached and Director’s Desk is a relatively small system that is offered by NASDAQ with about 10,000 users worldwide.

Copyright 2011 ABC News Radio







ABC News Radio