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3-Count Felon, JPMorgan Chase, Caught Laundering More Dirty Money

Photograph Source: Jill Carlson (jillcarlson.org) – CC BY 2.0

The International Consortium of Investigative Journalists (ICIJ) has once again managed to do what federal bank regulators refuse to do in the United States – come clean with the American people about our dirty Wall Street banks.

ICIJ dropped a bombshell investigative report Sunday about money laundering for criminals at some of the biggest banks on Wall Street, but you won’t find a peep about it on the front page of today’s Wall Street Journal or New York Times’ print editions. In fact, the New York Times, as of 6:44 a.m. Monday morning, hadn’t reported the story at all. The Wall Street Journal carries an innocuous headline, “HSBC Stock Hits 25-Year Low,” putting the focus on the British bank, HSBC, when its focus should be on the largest bank in the U.S., JPMorgan Chase, a serial felon.

JPMorgan Chase has already pleaded guilty to three criminal felony counts brought by the U.S. Department of Justice since 2014. Two of those counts related to money laundering and failure to file suspicious activity reports on the business bank account it held for Bernie Madoff for decades. JPMorgan Chase actually told U.K. regulators that it suspected Madoff was running a Ponzi scheme but it failed to share those concerns with U.S. regulators, even though it was required under law to do so.

The third felony count brought by the U.S. Department of Justice came one year later, in 2015. It related to JPMorgan’s involvement in a bank cartel that was engaged in rigging foreign exchange trading. The bank is currently under a criminal investigation for allowing its precious metals desk to be turned into a racketeering enterprise according to the Justice Department. Multiple JPMorgan precious metals traders have already been charged under the RICO statute, typically reserved for members of organized crime.

The ICIJ investigation is based on secret documents leaked from FinCEN, the Financial Crimes Enforcement Network, a unit of the U.S. Treasury. The documents “show that five global banks — JPMorgan, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon — kept profiting from powerful and dangerous players even after U.S. authorities fined these financial institutions for earlier failures to stem flows of dirty money.”

The report has much to say about JPMorgan Chase.

JPMorgan Chase was involved in moving illicit funds for the fugitive, Jho Low, involving the notorious looting of public funds in Malaysia. Jho Low has been accused by multiple jurisdictions of playing a key role in the embezzlement of more than $4.5 billion from a Malaysian economic development fund, 1MDB. JPMorgan Chase moved $1.2 billion in money for Jho Low from 2013 to 2016, according to the report.

The ICIJ bombshell includes the charge that JPMorgan also “processed more than $50 million in payments over a decade, the records show, for Paul Manafort, the former campaign manager for President Donald Trump. The bank shuttled at least $6.9 million in Manafort transactions in the 14 months after he resigned from the campaign amid a swirl of money laundering and corruption allegations spawning from his work with a pro-Russian political party in Ukraine.”

More troubling activity at JPMorgan Chase includes the following, according to ICIJ investigators:

“JPMorgan also moved money for companies and people tied to corruption scandals in Venezuela that have helped create one of the world’s worst humanitarian crises. One in three Venezuelans is not getting enough to eat, the UN reported this year, and millions have fled the country.

“One of the Venezuelans who got help from JPMorgan was Alejandro ‘Piojo’ Isturiz, a former government official who has been charged by U.S. authorities as a player in an international money laundering scheme. Prosecutors allege that between 2011 and 2013 Isturiz and others solicited bribes to rig government energy contracts. The bank moved more than $63 million for companies linked to Isturiz and the money laundering scheme between 2012 and 2016, the FinCEN Files show…”

Wall Street likes to brag about its “KYC” rule (Know Your Customer). But the ICIJ investigators reveal that JPMorgan Chase paid little attention to that rule. The report found this:

“Take the case of a mysterious shell company called ABSI Enterprises. ABSI sent and received more than $1 billion in transactions through JPMorgan between January 2010 and July 2015, the FinCEN Files show.

“This amount included transactions through a direct bank account with JPMorgan, which ABSI closed in 2013, and through so-called correspondent banking arrangements, in which a bank with significant U.S. operations, such as JPMorgan, allows foreign banks to process U.S. dollar transactions through its own accounts.

“Compliance watchdogs based at the bank’s Columbus, Ohio, operations hub decided to try to figure out ABSI’s actual owner in 2015 after a Russian news site reported that a similarly-named shell company — which JPMorgan’s records indicated was the parent of ABSI — was linked to an underworld figure named Semion Mogilevich.

“Mogilevich has been described as the ‘Boss of Bosses’ of Russia mafia groups. When the FBI put him on its Top Ten Most Wanted list in 2009, it said his criminal network was involved in weapons and drug trafficking, extortion and contract murders. The chain-smoking, beefy Ukrainian’s signature method of neutralizing an enemy, The Guardian once reported, is the car bomb.

“The records show the compliance officers searched in vain through their files on the shell company, unable to determine who was behind the firm or what its true purpose was.

“While those details still remain unclear, JPMorgan had plenty of reasons to examine ABSI years earlier: it operated as a shell company in Cyprus, considered a major money laundering center at the time, and it was directing hundreds of millions of dollars through JPMorgan…

“Through a spokesperson, Mogilevich said he had no knowledge of ABSI.”

Given the  roster of former CIA, Secret Service and FBI personnel that have gone to work at JPMorgan Chase over the years, we find it difficult to believe that the bank couldn’t identify the true owner(s) of ABSI.

In February of this year, the Financial Secrecy Index named the United States as the second worst country, behind only the Cayman Islands, in helping individuals hide their finances from the rule of law. The report noted that the U.S. “has yet to sign up to the Common Reporting Standard, which currently has 105 signatories.”

That makes the ICIJ’s money laundering report seem like a feature, not a bug, of the Wall Street banks.

We asked veteran trial lawyer Helen Davis Chaitman her thoughts on the latest ICIJ report. Chaitman and a fellow trial lawyer, Lance Gotthoffer, wrote a book in 2016 titled JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook. The book compares JPMorgan Chase to the Gambino crime family. Chaitman responded with this:

“Those of us who follow the activities of the world’s major financial institutions are not the least bit surprised by the documents in FinCEN’s files. On the contrary, it has been obvious for years that JPMorgan Chase, to take one example, operates just like an organized crime family…The criminalization of the major banks runs so deep that there is no solution other than to liquidate these banks and put their key management in prison.”

The Chairman and CEO of JPMorgan Chase is Jamie Dimon. The Board of Trustees of the bank has kept Dimon in these posts through the bank’s pleading guilty to the three criminal felony counts detailed above; through the “London Whale” scandal where the bank lost $6.2 billion of depositors’ money gambling in exotic derivatives in London; through the revelation that an internal whistleblower, lawyer Alayne Fleischmann, had witnessed and reported to management, to no avail, that there was “massive criminal securities fraud” in the mortgage operations of the bank; and through the current ongoing criminal investigation by the Justice Department of JPMorgan’s precious metals operations.

Dimon would be long gone had either the New York Times or the Wall Street Journal used its editorial page to demand his removal. Instead, the Wall Street Journal has used its editorial page to insanely paint the bank as a victim.

An October 20, 2013 editorial in the Wall Street Journal was headlined: “The Morgan Shakedown.” The unsigned editorial began with this:

“The tentative $13 billion settlement that the Justice Department appears to be extracting from J.P. Morgan Chase needs to be understood as a watershed moment in American capitalism. Federal law enforcers are confiscating roughly half of a company’s annual earnings for no other reason than because they can and because they want to appease their left-wing populist allies.”

Never mind that the $13 billion mortgage settlement came as a result of the Justice Department having thousands of documents illustrating what Alayne Fleischmann had alleged: “massive criminal securities fraud.”

In 2017 the Wall Street Journal editorial board was again attempting to portray the banks as victims, writing this time:

“Politicians and journalists have made careers of lamenting that too few bankers have been convicted of crimes. They overlook that, at least in America, to prove a crime you have to have enough evidence and that a mistake is not necessarily criminal.”

In late 2007, in the midst of what would become the greatest Wall Street crash at the hands of corrupt banks since the Great Depression, Rupert Murdoch’s News Corp. bought Dow Jones & Company, parent of the Wall Street Journal, after a century of ownership by the Bancroft family. The purchase curiously came at the same time that the Federal Reserve was secretly propping up the Wall Street banks with what would turn out to be three years of cumulative loans totaling $29 trillion to hide both the banks’ corruption and the Fed’s own negligence as a big bank supervisor.

In 2011, the Pew Research Center released a study on how front page business coverage had changed since the News Corp. purchase of the Wall Street Journal. Pew found that “coverage has clearly moved away from what had been the paper’s core mission under previous ownership—covering business and corporate America. In the past three and a half years, front-page coverage of business is down about one-third from what it had been in 2007, the last year of the old ownership regime.”

Every American should be horrified by this latest report from the ICIJ; every American should be outraged that the U.S. is now second only to the Cayman Islands for hiding dirty money for criminals; every American should demand that the New York Times and the Wall Street Journal give this story the front page coverage it deserves; and every American should look at this upcoming presidential election as the defining moment in whether the United States can be saved or will join a sad, tragic list of failed democracies.

This article first appeared on Wall Street on Parade.

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