Another Raid of Deutsche Bank, Another Dead Whistleblower

The Financial Times reported that “Germany’s federal police office, criminal prosecutors and the country’s financial watchdog BaFin raided Deutsche Bank’s headquarters in Frankfurt” last week, according to a statement from prosecutors.

The raid comes just four days after the body of Valentin (Val) Broeksmit, 46, was discovered at about 7 a.m. Monday at Woodrow Wilson High School in El Sereno, just outside of Los Angeles. Val Broeksmit was the son of William Broeksmit who was found hanged in his London home on January 26, 2014. The senior Boreksmit was a senior executive at Deutsche Bank involved in assessing risk on the bank’s balance sheet. (See our report: Documents Emerge in Senate Hearing from William Broeksmit, Deutsche Exec Alleged to Have Hanged Himself in January.)

According to a profile of Val Broeksmit written by David Enrich in the New York Times on October 1, 2019, the younger Broeksmit had obtained “a cache of confidential bank documents” left by his father that provided a “tantalizing” look into the internal workings of Deutsche Bank. Val Broeksmit was sharing the documents with the FBI.

Enrich explains what was going on around Deutsche Bank at that time:

“Federal and state authorities were swarming around Deutsche Bank. Some of the scrutiny centered on the lender’s two-decade relationship with President Trump and his family. Other areas of focus grew out of Deutsche Bank’s long history of criminal misconduct: manipulating markets, evading taxes, bribing foreign officials, violating international sanctions, defrauding customers, laundering money for Russian billionaires.”

Russian billionaires are now back in the news and Donald Trump is being fined $10,000 per day for failure to turn over documents to the New York State Attorney General’s office.

David Enrich had written an earlier piece in May of 2019 for the New York Times describing how a Deutsche Bank whistleblower, Tammy McFadden, and four of her colleagues, had their efforts blocked by the bank when they tried to file suspicious activity reports on bank accounts affiliated with Donald Trump and his son-in-law/advisor Jared Kushner. The suspicious activity reports (SARs) should have been filed with the Federal agency known as FinCEN (Financial Crimes Enforcement Network) but were quashed by a unit of the bank that manages money for the super wealthy.

The coroner has not yet released a cause of death for the younger Broeksmit. His father’s death was ruled a suicide. The two Broeksmits are not the only individuals connected to Deutsche Bank to have turned up dead. On October 24, 2014 the body of Calogero Gambino, 41, was found by his wife hanging from a stairway banister in their Manhattan home. Gambino was a lawyer for Deutsche Bank who had been cooperating with U.S. regulators on Deutsche Bank’s involvement in the rigging of the interest rate benchmark, Libor.

Nor is this the first time that Deutsche Bank’s headquarters have been raided. As we previously reported, on November 29, 2018, Deutsche Bank’s headquarters in Germany were raided by 170 members of law enforcement. Prosecutors said at the time that “Deutsche Bank helped customers found offshore organizations in tax havens by transferring illegally acquired money without alerting authorities to suspected money laundering.” On September 24, 2019 the German police raided Deutsche Bank headquarters for the second time in less than a year.

Deutsche Bank is a major derivatives counterparty to Wall Street’s mega banks. The Bank was having serious problems throughout 2019 and in the days before its trading unit, Deutsche Bank Securities Inc., began to secretly tap trillions of dollars in cumulative loans from the Fed’s repo loan bailout facility.

Deutsche Bank’s attempt to merge with Commerzbank fell through in April 2019. It announced a plan to fire 18,000 workers in July 2019 and had plans to create a good bank/bad bank, isolating off toxic assets that it planned to sell. Deutsche Bank had incurred losses in three of the prior four years. Its share price had lost 90 percent of its value over the prior dozen years and was trading close to an historic low in September 2019. The Monday after the emergency repo loan operations began, Deutsche Bank announced that it would be moving clients and staff from its prime broker unit (that makes loans to hedge funds) to BNP Paribas along with its electronic trading operations.

Newly released documents from the Fed show that on September 17, 2019, the first day of the Fed’s emergency repo loan operations, Deutsche Bank borrowed $1.5 billion in a one-day loan. By September 24, Deutsche Bank had upped its one-day repo loans to $7 billion. By September 25, Deutsche Bank increased its one-day borrowing to $9 billion. On September 27, Deutsche Bank took a $3 billion 14-day term loan and rolled over $6 billion in a 3-day loan.

Later documents released by the Fed show that Deutsche Bank borrowed a cumulative, term-adjusted total of $1.39 trillion from the Fed’s repo loan program in the fourth quarter of 2019 and another $1.24 trillion in the first quarter of 2020. The Fed will release data for the second quarter of 2020 on June 30 of this year. The Fed is releasing the information on a quarterly basis following a two-year lag.

Deutsche Bank units were also secretly bailed out by the Fed during and after the 2008 financial crisis. According to an audit conducted by the Government Accountability Office, Deutsche Bank units borrowed a total of $354 billion in cumulative loans from the Fed’s bailout programs, with the bulk of that amount coming from the Term Securities Lending Facility (TSLF) which ran from March 11, 2008 through February 1, 2010.

As Wall Street On Parade has previously reported, Deutsche Bank has also acquired an unseemly history of fines for its illicit activities. Below is a sampling:

+ April 23, 2015: Deutsche Bank pleads guilty to the U.S. Department of Justice for its role in rigging the benchmark interest rate known as Libor. It pays fines of $2.519 billion to various regulators.

+ January 17, 2017: Deutsche Bank reaches a settlement with the U.S. Department of Justice in which it agrees to pay $7.2 billion in fines and restitution for its improper “packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2006 and 2007.”

+ January 30, 2017: Deutsche Bank is fined a total of $630 million by U.S. and U.K. regulators over claims it laundered upwards of $10 billion on behalf of Russian investors.

+ January 29, 2018: Deutsche Bank is ordered to pay $30 million by the Commodity Futures Trading Commission for manipulating trading in the precious metals market.

+ November 8, 2019: Nomura and Deutsche Bank, along with numerous employees, were convicted in a trial in Italy for helping the Tuscan bank, Monte dei Paschi di Siena, commit fraud in derivatives deals to help it hide losses.

+ January 18, 2020: The Commodity Futures Trading Commission fines Deutsche Bank $10 million to settle two cases: one involving failure to properly report swap transactions and the other for spoofing.

+ July 7, 2020: The New York State Department of Financial Services settles a state civil matter with Deutsche Bank for $150 million over its involvement with child sex trafficker Jeffrey Epstein.

+ October 13, 2020: The Frankfurt, Germany Public Prosecutor’s Office fined Deutsche Bank €13.5 million for failing to submit Suspicious Activity Reports in a timely fashion regarding potential money laundering activities.

+ January 8, 2021: The Justice Department and Securities and Exchange Commission settle charges against Deutsche Bank for $120 million for violating the Foreign Corrupt Practices Act. The charges related to paying bribes to foreign officials to obtain business.

Why the Fed continues to prop up a serial miscreant is a question that every concerned American should be asking their representatives in Congress.

This first appeared on Wall Street on Parade.