SEARCH

Entries in Justice Department (9)

Tuesday
Feb052013

Justice Department Goes After Standard & Poor's over Financial Crisis

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- The Justice Department is going after Standard & Poor's, the largest credit ratings firm, accusing it of inflating the housing bubble.  A federal lawsuit was reportedly filed Monday night in Los Angeles.

The government alleges that rosy endorsements of risky mortgage-backed securities ignored Standard and Poor's own standards.

According to The New York Times, the civil suit claims that between 2004 and 2007, S&P “knowingly and with the intent to defraud, devised, participated in, and executed a scheme to defraud investors."

The collapse of mortgage bonds triggered the financial crisis that cost investors billions of dollars.

In a statement reacting to the lawsuit, S&P called the government's lawsuit "entirely without factual or legal merit."  The company complained that it was being punished unfairly for failing to predict the collapse of the housing market. 

The lawsuit is the first federal crackdown against ratings firms linked to the mortgage mess.  Some state prosecutors are expected to join the suit.

Copyright 2013 ABC News Radio

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

Thursday
Mar082012

Report: Apple, Publishers Warned Over E-Book Price Fixing

iStockphoto/Thinkstock(NEW YORK) -- The Justice Department is reportedly threatening to sue Apple and five big name publishers for allegedly fixing the price of electronic books, or e-books.

Citing people familiar with the matter, the Wall Street Journal reports that Apple and the publishers -- Simon & Schuster Inc., Hachette Book Group, Penguin Group, Macmillan and HarperCollins Publishers Inc. -- worked together to change the model under which e-books were priced right around the time when the first iPad was introduced.  This resulted in higher costs to consumers across the board.

Without the change, Amazon could have emerged as the leader in e-books with its bargain prices.

The publishers say that the shift in pricing warrants more competition and allows more electronic booksellers to thrive, according to the Journal, but they have denied teaming up to hike prices.

The Justice Department, publishers and Apple have declined to comment on the allegations.

Copyright 2012 ABC News Radio

Wednesday
Dec212011

Countrywide Fine Is Largest in History for Loan Discrimination

Jin Lee/Bloomberg via Getty Images(WASHINGTON) -- Bank of America, which now owns Countrywide Financial, agreed to pay more than $300 million -- the largest fine ever of its kind -- to settle allegations of discrimination against African-American and Hispanic borrowers, the Justice Department announced Wednesday.

An investigation looked at 2.5 million loans made during the height of the housing boom in 2004 through 2007 and found, according to Attorney General Eric Holder, "widespread violations of the Fair Housing Act and the Equal Credit Opportunity Act and resulted in African-American and Hispanic borrowers being charged higher rates for mortgage loans solely because of their race or origin."

Assistant Attorney General Tom Perez says black and Latino borrowers who qualified for prime loans were steered toward risky subprime mortgages.

"As a result of these policies and practices, the odds of an African-American or Latino borrower receiving a subprime loan instead of a prime loan were more than twice as high as those for similarly situated non-Hispanic white borrowers," Perez said Wednesday.

The Justice Department said Wednesday what Countrywide did was not criminal, rather a violation of federal civil rights law.  But many disagree and find it difficult to understand how loans ripe with fraud, applications forged and applicants lied to can not result in one elite person at Countrywide being prosecuted. This is the fifth time Countrywide has been targeted for fraud.

The $300 million settlement against the now defunct Countrywide Bank, once the largest home mortgage company in America, means at most the 200,000 discrimination victims in 41 states will get no more than a couple of thousand each in restitution.

Copyright 2011 ABC News Radio

Friday
Sep302011

US Officials Say Solyndra Execs Stonewall on Financial Info

Ken James/Bloomberg via Getty Images(WASHINGTON) -- Top executives at Solyndra have refused to tell U.S. officials whether they received executive bonuses after the company began to fail, and they have frustrated bankruptcy proceedings by refusing to answer questions about the solar firm's sudden and dramatic shutdown, according to papers filed by Justice Department lawyers late Friday.

A Solyndra attorney told U.S. officials the reason he would not identify the company's customers or talk about its contracts was because "the topic would likely be the subject of investigation and possibly litigation," according to the court filing.

The fresh allegations that Solyndra is refusing to cooperate in bankruptcy proceedings come just days after two top Solyndra executives declined to answer questions from Congress, invoking their Fifth Amendment rights against self-incrimination. The government's claim that Solyndra is refusing to answer questions was detailed in papers filed by the attorneys representing the U.S. government during bankruptcy proceedings in Delaware. The solar company was awarded a $535 million federal loan as part of President Obama's program to help spur growth in emerging forms of alternative energy. Now, federal lawyers are seeking to recover at least some of that money.

In their filing, government attorneys called on the bankruptcy court judge to put the company in the hands of an independent trustee, so its books could be pried open.

"Management's invocation of the Fifth Amendment does not excuse them from performing their fundamental disclosure and reporting duties under the Bankruptcy Code," the filing says.

One topic of deep concern to federal attorneys is the accuracy of Solyndra's financial statements. According to a report Thursday by Bloomberg, a focus of a federal investigation into the firm's behavior is whether it lied to Energy Department officials in order to secure additional financing after the company started to fail.

Friday's filings note that Solyndra executives refused to say "whether financial information submitted or represented to investors, creditors, and others was accurate."

According to the government, the executives have also refused to say when they determined the company was in financial trouble, and "whether the company paid management bonuses after management realized the company's poor financial condition."

"Such topics lie at the core of the information that [Solyndra] must disclose," the court filing said.

A spokesman for Solyndra has not replied to an email seeking comment.

In March, ABC News, in partnership with the Center for Public Integrity's iWatch News, began reporting on simmering questions about the process that led the Obama administration to make Solyndra the first company to receive a loan under a program designed to provide government support to companies that would create jobs while generating energy from cleaner sources, such as solar, wind and nuclear. President Obama personally visited the Solyndra complex, hailing it as a leader in this emerging field.

In August, though, Solyndra abruptly shut its doors, laying off 1,100 workers. And within days it declared bankruptcy. The FBI raided the plant days later, part of an investigation that involves inspector generals for the Energy Department and the Treasury Department. In addition, Republicans in the House Energy and Commerce Committee have been working to dissect the deal and understand how signs of Solyndra's financial trouble had been overlooked by the Department of Energy.

Copyright 2011 ABC News Radio

Wednesday
Apr202011

Feds Launch Criminal Investigation over Chipotle Hiring Practices

Comstock/Thinkstock(WASHINGTON) -- The Justice Department and the U.S. Attorney's Office in Washington, D.C. is investigating Chipotle Mexican Grill Inc. for its hiring practices, which have been under review by U.S. Immigration and Customs Enforcement, according to a Wall Street Journal report.

The government wishes to establish whether the Mexican restaurant chain knowingly hired illegal immigrants, sources told WSJ.

The disclosure of the Department of Justice probe into Chipotle's quarterly earnings reportedly was made by Chipotle executives on the company's conference call Wednesday.  Prosecutors have sought audits of the company's employees to be completed by ICE agents.

The U.S. Attorney's Office is not commenting on the case.

Copyright 2011 ABC News Radio

Wednesday
Apr132011

Fed's Disable Cyber-Crime Computer Network that Stole Millions 

Jupiterimages/Thinkstock(WASHINGTON) -- The FBI and the Justice Department say they have disabled a "botnet" of more than two million computers infected with malicious code that Eastern European cyber criminals may have used to drain millions of dollars from bank accounts around the world.

The victims include a Tennessee defense contractor that had $241,000 stolen from a bank account, a Michigan real estate company that lost more than $115,000, a South Carolina law firm that had $78,000 taken from accounts and a North Carolina investment firm that lost $151,000 from fraudulent wire transfers, according to court documents.

U.S. authorities continue to combat the network of remotely controlled computers called the "Coreflood" botnet, which has secretly recorded computer users' keystrokes to compromise vast amounts of banking and financial data. Botnets are armies of so-called "zombie" computers, often ordinary people's machines, that have been hijacked by hackers and ordered to vacuum up private information from bank accounts, credit card data, email services and social media sites.

Coreflood is believed to have been operating since 2002 and has resulted in an unknown number of U.S. bank accounts being broken into with losses that could be in the hundreds of millions of dollars, according to FBI officials.

The Justice Department and FBI filed a civil complaint against 13 "John Doe" defendants, charging them with wire fraud, bank fraud and illegal interception of electronic communications. Investigators will seek to identify the "John Does" as the investigation continues.

The FBI and Justice Department also have executed search warrants to seize Internet domain names believed tied to be the control servers for the Coreflood program.

The botnet has stolen vast amounts of funds from bank accounts in the United States, FBI officials said, and could have stolen hundreds of millions of dollars worldwide.

Investigators received a temporary restraining order from the district court allowing them to seize control of the infected computer servers to try to further dismantle and disable the Coreflood botnet. According to Justice Department officials, the server that will seek to counter Coreflood will be run by the Internet Systems Consortium, a non-profit group that works on Internet infrastructure and security issues.

FBI officials say that Coreflood program still will be present on victims' computers, but those victims can take action to remove the malicious software through proper security measures.

In a press release Wednesday, DOJ noted, "The public may go to the following sites operated by U.S. Computer Emergency Readiness Team (CERT) and the Federal Trade Commission, respectively: us-cert.gov/nav/nt01 and onguardonline.gov/topics/malware.aspx."

Microsoft also has developed malicious software removal tools to remove botnets including Coreflood.

Although FBI officials declined to say where the Coreflood botnet originated, previous media reports and cyber-security experts have traced it to cyber criminal gangs in Russia. Researchers at Dell SecureWorks claim they were the first to trace Coreflood to a computer crime ring from Russia. Testifying before the Senate Judiciary Committee on Tuesday, Gordon Snow, the assistant director of the FBI's Cyber Division, spelled out how Russia and Eastern Europe were a hotbed of computer crime.

Copyright 2011 ABC News Radio 

Wednesday
Dec082010

Drug Firms Pay $421 Million in Settlement with Justice Department

Photo Courtesy - Getty Images(WASHINGTON) -- The Justice Department announced a $421 million settlement against three pharmaceutical companies on Tuesday for their alleged involvement in a scheme to drastically inflate the price of drugs --sometimes by a whopping 1,000% -- which was reimbursed by Medicare and Medicaid and, ultimately, the U.S. taxpayer.

The settlements were reached in three False Claims Act cases filed against Abbott Laboratories, B. Braun Medical Inc. and Roxane Laboratories.  Both B. Braun and Roxane are U.S. subsidiaries of German pharmaceutical firms.

Under the settlement agreements, Abbott Laboratories agreed to pay $126.5 million in fines, B. Braun Medical agreed to pay $14.7 million, and Roxane will pay $280 million for making Medicare and Medicaid pay the allegedly inflated reimbursements.

The investigation into the companies' activities followed a whistleblower lawsuit filed by Ven-A-Care, a home infusion company based in southern Florida.  A civil complaint against Abbott filed by Ven-A-Care in 2007 noted that Abbott was charging huge mark-ups on the price of their drugs when they sought reimbursement from the government.

Copyright 2010 ABC News Radio

Monday
Nov292010

Government Cracks Down on Sites Selling Counterfeit Goods

Photo Courtesy - Getty Images(WASHINGTON) -- The Justice Department and Homeland Security's Immigration and Customs Enforcement operation on Monday announced they have seized 82 domain names that were being used to sell counterfeit goods, including fake handbags, pirated software, copies of DVDs and phony Burberry scarves.  A lot of people wouldn't fall for the fakes, but enough would be satisfied with them that they stayed in business, until now.

A few of the seized URLs include dvdcollectionsale.com, coachoutletfactory.com, mydreamwatches.com, usaburberryscarf.com, burberryoutletshop.com, massnike.com.

"By seizing these domain names, we have disrupted the sale of thousands of counterfeit items, while also cutting off funds to those willing to exploit the ingenuity of others for their own personal gain,” said Attorney General Eric Holder in a statement. “Intellectual property crimes are not victimless. The theft of ideas and the sale of counterfeit goods threaten economic opportunities and financial stability, suppress innovation and destroy jobs."

The government timed its announcement for Cyber Monday, and the effort is part of something called Operation in Our Sites.

Copyright 2010 ABC News Radio







ABC News Radio