Marcy Wheeler: Once Again, Jamie Dimon Gets Special Treatment

By Marcy Wheeler. Cross posted from emptywheel

Yesterday, the Office of the Comptroller of the Currency issued two orders to JP Morgan Chase, one related to its London Fail Whale, the other related to failures in its Bank Secrecy Act/Anti-Money Laundering compliance. With respect to latter order, OCC said, in part:

(1) The OCC’s examination findings establish that the Bank has deficiencies in its BSA/AML compliance program. These deficiencies have resulted in the failure to correct a previously reported problem and a BSA/AML compliance program violation under 12 U.S.C. § 1818(s) and its implementing regulation, 12 C.F.R. § 21.21 (BSA Compliance Program). In addition, the Bank has violated 12 C.F.R. § 21.11 (Suspicious Activity Report Filings).

(2) The Bank has failed to adopt and implement a compliance program that adequately covers the required BSA/AML program elements due to an inadequate system of internal controls, and ineffective independent testing. The Bank did not develop adequate due diligence on customers, particularly in the Commercial and Business Banking Unit, a repeat problem, and failed to file all necessary Suspicious Activity Reports (“SARs”) related to suspicious customer activity.

(3) The Bank failed to correct previously identified systemic weaknesses in the adequacy of customer due diligence and the effectiveness of monitoring in light of the customers’ cash activity and business type, constituting a deficiency in its BSA/AML compliance program and resulting in a violation of 12 U.S.C. § 1818(s)(3)(B).

That last one is the real peach. You see, in spite of the fact the order includes 22 pages of things JPMC “shall” do to fix this problem, the order did not include any fine. Remember, it has been less than 18 months since JPMC got caught–among other things–sending a ton of gold bullion to Iran in violation of sanctions. That time, at least, Treasury’s Office of Foreign Asset Controls fined JPMC, if only $88.3 million.

Still, here were are a year and a half later, with JPMC still refusing to police what it is helping its customers do, and the government is letting JPMC off with no fine.

Compare that to the treatment of Karen Gasparian, the manager of the G&A Check Cashing company out in LA. Today, he got sentenced to five years in prison for doing precisely what Jamie Dimon did: fail to comply with BSA/AML law. In his sentencing, he even submitted record of all the big banks that have skated for doing what he did, including HSBC’s 1.9 Billion wrist slap, and noted the disparity in treatment.

An even greater problem with the Government’s seeking a sentence of incarceration in this case is the disparity when compared to other instances of the same offense, or instances involving even more egregious conduct, such as much larger financial institutions conducting business with drug trafficking organizations and terroristic regimes like Iran. Time and time again, the United States Government has offered deferred prosecution agreements (and fines) to financial institutions whose conduct was exponentially more egregious than the conduct at issue here. Mr. Gasparian’s offense, while serious, was still far short of the conduct committed by these other institutions. Any sentence of incarceration in this case would be a loud proclamation that the rich and powerful receive one type of justice, while those less powerful receive another type.

The government, of course, insisted on enhancements to Gasparian’s sentence because his crime amounted to over $100,000 in a one year period (the government sent two confidential witnesses to cash checks at G&A, which is how they proved that amount).

Remember HSBC provided over $990 million in cash to a terrorist bank over a four year period. All that’s before you consider their money laundering for Mexican cartels and probable Russian mafia. Not a single HSBC employee was so much as indicted, much less sent to jail for five years or for a lifetime for material support for terrorism.

And now JPMC–and it’s “manager,” Jamie Dimon–not only get off without indictments, but without even a fine (at least not from OCC–OFAC may end up fining them).

The government submitted a bunch of sealed documents explaining why Gasparian should be treated so much more harshly than the big banks. I’m just going to assume the government explained what great intelligence work the big banks are doing to avoid being subjected to the rule of law.

Predictably, Lanny Breuer waved his dick around boasted about this conviction.

“Karen Gasparian, Humberto Sanchez and their company G&A Check Cashing purposefully thwarted the Bank Secrecy Act, making it easier for others to use G&A to commit illegal activity,” said Assistant Attorney General Breuer. “They knew they were required to report transactions over $10,000, but deliberately failed to do so. As this case shows, check cashing businesses must adhere to our anti-money laundering rules, or else pay the consequences.”

This is the guy who, just one month ago, failed to even mention he was letting a bank that sent hundreds of millions in cash to a terrorist bank off without any charges.

At this point, it’s beginning to look like DOJ’s disparate treatment is not just about preserving his buddies the CEOs. But it’s about eliminating the little competitors like G&A so the equally corrupt big banks can take over their markets.

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  1. LucyLulu

    Only the little guys and foreign banks get slammed. And people like Aaron Swartz. One can predict the punishment in advance, not by the crime, but by the criminal. While I’ve committed no crime I know of, I pray the DOJ never comes after me. I’ll never see the light of day again. The strategy is most effective. The 99% will stay in line.

    1. 3CPO

      The really question here is your failure to be reasonable. What would Mitt Romney have done?
      Obama should get new constituents. You people are(n’t) satisfied with nothing.

      1. Yves Smith Post author

        If you had not commented here before, I would swear someone paid for your remark. Invoking “reason” in defense of Obama is Dem hackspeak.

        The failure to threaten Obama with not voting for him is why he has been so dreadful. You “oh, look, Romney” people are enablers of the worst Obama behavior. And you add insult to injury by defending it rather than having a cold, hard look in the mirror, and at how lousy Obama is.

        1. Mark P.

          I’m not sure myself. But it may be that, firstly, 3CPO is being ironic and, secondly, it’s late and you didn’t parse him/her correctly.

          “You people are(n’t) satisfied with nothing.” That looks sort of like irony.

          1. Yves Smith Post author

            Yes. my snark meter may need tuning. I’m also way screwed up sleep cycle wise, even worse than usual, which also may not help.

        2. dolleymadison

          AMEN SISTER! Democrats used fight againt “the man” – now they ARE the man. I am stunned at how many Obama supporters fail to see how in bed he is with the Banks.

    2. jdw

      I’ve got a bit of familiarity with the G&A Check Cashing stuff, and that was a Russian/Armenian mob outfit. Just because big guys are bad doesn’t mean little guys are good.

      1. dolleymadison

        No question the “little guys” are bad…it is just the discrepancy in treatment and the big show over stopping a thimble full of fraud while sanctioning a Niagra Falls of fraud. Same thing happens locally – they’ll let BofA et al fraudulently foreclose on scores of homeowners while making a big show over shutting down some 2-bit mortgage broker doing no doc loans. (never mind he is selling them to BoFa, et al)

    1. LucyLulu

      Second or third world? More recent descriptions of third world countries include attributes such as income disparity, wealthy ruling class, decline in civil rights, lack of middle class, high rates of poverty and unemployment

      “”Tens of millions of people are hungry every night, including milllions of children who are suffering from Third World levels of disease and malnutrition. In New York City, one of the richest cities in the world, 40 per cent of children live below the poverty line, deprived of minimal conditions that offer some hope for escape from misery, destitution and violence.”
      ~Noah Chomsky re: America

      Twenty Year History of Transition to Third World Status

  2. John Hope

    I assume you were being ironic. Of course america is a failed state. The only question remaining is when will it finally fall over and leave the rest of the world to get on with their lives.

    1. another

      We shouldn’t presume that the US empire will leave the stage in as civilized a manner as the Soviet empire did. It would surprise me if the spoiled children at the top of the heap don’t throw a nuclear hissy fit before it’s all over.

      Though I notice your name is Hope.

  3. Max424

    A friend and I used to play chess while smoking weed and drinking Dewars.

    Admittedly, getting f-cked up in this manner was not always conducive to quality play. In fact, one night, my friend made a move so dubious, I had to tell him to take it back.

    “Interesting. You’ve decided to sac your queen on move eight. Can you tell me, what Godly purpose does this serve?”


    “Your brave queen. She now boldly sits adjacent to my center pawn. My pawn takes Her Royal Dumbass at E5. Game over. Unless you are now greater than all the Grandmasters that have come before you, and uncovered a diabolical winning line for this opening which involves the prepubescent sacrifice of your favorite piece, which I doubt, I suggest you take your move back.”

    “Can’t take the move back. This is chess.”

    “Look. This is the fourth game in a row that ended before move twelve. We need to work together if we want to once more engage in exiting middle game action. And don’t forget those spicy end game scenarios, which our current stage of inebriation, we are unlikely to ever see again.”

    “If I’m not mistaken, you are suggesting that we prop each other up. A novel concept: we must give aid and succor to our enemy, because our enemy is incompetent, and without a competent enemy, what is the point?”


    “You can’t fight a dead enemy.”


    “How can we know glory, if no one can give us battle.”

    “Yes, that’s it.”

    “Mine Enemy and I … Are As One.”

    “Whatever. Now how ’bout we take the move back.”

    “Ok, I’m taking it back.”

  4. Middle Seaman

    When certain people are more equal than others, you enter into zone of 19th century states and most of the 20th century South American states. The problem is now and will get worse if not stopped.

    Obama canibalized the Democratic Party. It’s now to the right of Nixon and Eisenhower. The political center and the left died. The Obama supporting left has ceased to politically exist.

    The post alarms or should alarm every non 1% person.

  5. OMF

    How is it that people have the freedom to point out injustices like these, but yet they not only continue but seem to increase in frequency and scale? Is this an ever present problem, or has our society lost some “function” or process required to deal with all of this?

    1. sierra7

      OMF: You make a good point….
      It’s called, “Lack of Historical Memory”
      Most Americans (except those in my age bracket, 82) have no conception of how the (global more or les) middle class was built.
      How much blood has been spilled (more or less globally) to acheive the decency of decent wages, health benefits, modest retirements, etc…….
      Globalization has already acheived its goals in its most wildest dream:
      The beginning and continuing destruction of that middle class; the redistribution of global labor from the “haves” (global middle class wherever it exists(ed)) to the “have nots” and the continuing erasure of history and the demonizing of organized labor as a threat to “free markets”.
      The beginning “began” in the middle of WW2, continued with the legislation NSD-68, giving all subsequent presidents power to excercise out of the “eyes of Congress”; deregulation of public insitutions like energy and nation wide organized labor contracts to the ultimate deregulations applied during the 1990’s through the mess of September 2008 to the present.
      Under the “capitalist” system, “globalization” of labor cannot be avoided; the problem is that the ultimate wealth holders may increase marginally, the lower end of the labor class continues to be crushed in the millions.
      Can the process be slowed down or stopped.?
      Who is going to raise the consciousness of the younger members of the US?; Millions not living in the US or in the Western “democracies” are already and have been acutely aware of how the system works.
      In short, crushing the middle class in the US (and other “capitalist” countries) was/is the target…….in order for multi-national manufacturing corporations can compete in a global arena.
      Those of us who have acutely followed the US role in our own hemisphere and have been active in the labor and education movements already could see way back in the later 1970’s that the handwriting was on the wall for US labor; What we were doing in “third world” countries, arresting, torturing labor activists, outright murdering them and oppresing citizenry in those countries suffering under US backed dictatorships, would eventually have to rebound as a kind of “social blowback” on the US citizenry. And, of course that has happened with the continuing crushing by hook or by crook labor organizations here in the US in the present day.
      Yes, there is no historical memory. Our increasingly quasi-totalitarian presidencies depend on it. The passage of the latest versions of “Patriot Act” legislation is proof we are on a horrible downslide and there is no bottom and no saving the “middle class” here in America from which all decent sodial amenities arise.
      The rest is history.

  6. AvgJohn

    I am in no way advocating for gun violence or violence of any kind, so please don’t bother trolling me. However, it seems so strange that it is the innocent that are being slaughtered and brutalized in our society, while those most responsible for the insane conditions that haunt and plague us (and drive the most weak minded and spiritually-depraved among us to desperate acts of violent unspeakable evil), seem to be totally unscathed by results of their own greed, corruption, cronyism and evil.

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