| Title | Only One Top Banker in Jail for Financial Crisis | |
| Date | Wednesday May 07 2014, @03:28AM | |
| Author | LaminatorX | |
| Topic | ||
| from the Paper-Tigers dept. | ||
After the savings-and-loan scandals of the 1980s, the FBI opened 5,490 criminal investigations, 1,100 people were prosecuted, and 839 were convicted, including top executives at many of the largest failed banks. But Jesse Eisinger writes in the NYT that the largest man-made economic catastrophe since the Depression resulted in the jailing of a single investment banker, Kareem Serageldin, to 30 months in jail. Many assume that federal authorities simply lacked the guts to go after powerful Wall Street bankers but according to Eisinger, the truth is more complicated. "During the past decade, the Justice Department suffered a series of corporate prosecutorial fiascos, which led to critical changes in how it approached white-collar crime. The department began to focus on reaching settlements rather than seeking prison sentences, which over time unintentionally deprived its ranks of the experience needed to win trials against the most formidable law firms."
From 2004 to 2012, the Justice Department reached 242 deferred and nonprosecution agreements with corporations, compared with 26 in the previous 12 years, and while companies paid huge sums in the settlements, several veteran Justice Department officials say that these settlements emboldened defense lawyers. More crucially, they allowed the Justice Department's lawyers to "succeed" without learning how to develop important prosecutorial skills. The erosion of the department's actual trial skills soon became apparent. In November 2009, the U.S. attorney's office in Brooklyn lost the first criminal case of the crisis against two Bear Stearns executives accused of misleading investors. The prosecutors rushed into trial, failing to prepare for the exculpatory emails uncovered by the defense team. After two days, the jury acquitted the two money managers. "For sure, it put a chill" on investigations says one former prosecutor. "Politicos care about winning and losing." Federal prosecutors have their own explanation for how only one Wall Street executive landed in jail in the wake of the financial crisis, says Eisinger. "The cases were complex to investigate and would have been infernally difficult to explain to juries."
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