The racketeers even built a phony shell company and an electronic database to expedite their fraud.
As it turns out, Housing and Urban Development audits of banks involved in the settlement showed that all of them had hindered investigation into their misdeeds. That makes the deal even more of a travesty than it initially seemed to be, since it means the banks made it impossible to know how much criminality they were guilty of -- or how high in the organization the culpability went -- before the deal was done.
Investigators were polite in their language -- always saying "failed to maintain controls" while describing ongoing patterns of deliberate misrepresentation, and taking banks at their word sometimes when bankers claimed they couldn't locate vital records -- but the picture they paint is clear. It consistently includes phrases like "Probable violations of the False Claims Act" in addition to providing descriptions of better known crimes.
And while the False Claims Act is a civil statute, the politically connected lobbying and law firm Arent Fox correctly notes that "there are many criminal statutes ... that are close analogs ... it is essential to consider if there is any basis present for possible criminal liability as well."
The audits even include remarkable sentences like this one: "Wells Fargo told us that we could not interview the other (employees) because they had reported questionable affidavit signing or notarizing practices when it interviewed them."
Oh, well in that case, never mind.
We've provided excerpts from the audits below: Read 'em and weep.
But then, Wells Fargo bankers weren't even indicted for laundering money from the Mexican drug cartels that have murdered 65,000 people (use detail from that piece). Why would they worry about indictments for obstructing justice, or for something as trivial as defrauding the US taxpayer? (That's what the False Claims Act addresses.)
It was a dead giveaway when the so-called "Justice" Department declined to prosecute Goldman Sachs for its apparent defrauding of customers, or for what appeared to be perjury when senior executives appeared before Senate investigating committees.
Why has the Justice Department let all these wrongdoers go free? There's been a shifting panoply of excuses. There was the "no laws were broken" excuse, dutifully echoed by both Barack Obama and Tim Geithner, but there's overwhelming evidence of lawbreaking to refute that claim.
There's also many billions of dollars paid out in fraud settlements. But then, the crooks themselves don't pay those settlements and fines. Their shareholders do -- sometimes for acts of fraud against the shareholders themselves. That aside, did these multi-billion-dollar frauds commit themselves?
That suggests a new concept: "drone fraud," a form of crime which takes place without any individuals present to commit it.
What Real Prosecutors Can Do
The Justice Department is also fond of complaining that getting convictions in financial fraud cases is too hard because the details are complicated. Leaving aside the absurdity of the excuse-making -- what would townsfolk do if their police chief said "I'd arrest those crooks, but it's pretty hard work chasing those boys" -- there are thousands of convictions to disprove this argument. There are, for example: