Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

So it *is* possible to persuade a jury to return a guilty verdict against a banker

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Image courtesy of DollarPhotoClub.com

Image courtesy of DollarPhotoClub.com

When sitting down to read my copy of The Wall Street Journal on Friday, I was surprised to read that a Jury Delivers First U.S. Libor Manipulation Convictions. This is even more intriguing after I mentioned last week that Explaining complex financial details to jurors is an obstacle to putting senior executives in jail and previously asked back in November 2014 So you think tons of bankers should be in jail? Getting a jury to agree seems to be a problem.

In this case, two bankers were indicted for conspiracy and wire fraud for manipulating Libor interest rates while they worked for Rabobank. On November 5 they were convicted by a jury. Therefore we no longer need to use the word allegedly when discussing their manipulation of interest rates.

Rabobank previous paid fines totaling $1.065B for manipulating Libor. Yes, just over a billion dollars. I previously discussed their settlement here. By my notes, Rabobank has dropped from 2nd place in 2013 to 4th place now in the race for the largest fines paid because of manipulating Libor.

Article suggests the feds persuaded the jury by explaining the traders manipulated the rate to benefit the bank’s portfolio which would eventually would be good for them in terms of their compensation. A performance evaluation for one of the now-felons said that he had made the bank a lot of money and should be compensated accordingly. That evaluation show his motivation and his payoff.

Article says 13 individuals have been charged in the U.S. for manipulating Libor. This is the first trial. Several of those accused have already pled guilty. Three of those who already copped a plea worked at Rabobank and testified against the two now-convicted traders.

Case details

Case number is 1:14-cr-00272-JSR in the Southern District of New York.

I looked up the case in the federal PACER system. Some things I learned:

Mr. Anthony Allen was convicted on one count of conspiracy and 18 counts of wire fraud. Each of the wire fraud convictions was for a specific “transmission”, each on a different day. I think transmissions would be individual text messages or emails.

Mr. Anthony Conti was convicted on one count of conspiracy and 8 counts of wire fraud.

Looks like these are the two federal statutes charged:

  • 18:1349.F WIRE FRAUD AND BANK FRAUD CONSPIRACY
  • 18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION AFFECTING FINANCIAL INSTITUTION

I took a look at chapter 2 of the Federal Sentencing Guidelines. I am way over my head in terms of trying to sort out the possible sentence. For the Keith Graves case, I was able to make some guesses. Mr. Graves was convicted on five counts of human trafficking along with one count possession of and one count distribution of methamphetamine. In this situation, I am completely lost in the details. I can’t even find something to match for a base offense level and have no clue how the multiple counts for the closely related actions will be counted. Will have to wait for the sentencing arguments from the feds and defense to sort that out.

As one indicator of how complex these cases are, Mr. Allen introduced into the court record (item 147) a letter arguing against the feds position of conscious avoidance in the jury instructions. He also asserted that his voluntary waiver of extradition indicates his ‘consciousness of innocence.’ I have no clue for what the implications are of those comments.

Two things I do realize from those comments on the docket. First, when you get into trouble with the feds, you really need an attorney. Mr. Keith Graves really goofed when he decided to represent himself. Second, think of the time needed for attorneys to think through the case, develop all the arguments, and file all the motions need in a federal case. That is why a defense against serious charges is so hideously expensive.

Other people charged in this case

The case summary at PACER shows seven individuals as defendants. Two were just convicted. Three have pled guilty. Based on the arithmetic and browsing a few dockets it looks like two are awaiting trial.

I looked at the docket for one of individuals who has pled guilty. On August 18, 2014 there is a minute entry showing he pled guilty to count #1, which is conspiracy to commit wire fraud and bank fraud. He was charged with 1 count of conspiracy to commit fraud and 14 counts of wire fraud. Sentencing is set for June 9, 2017. He will be on bail until then.

The WSJ article says there are no more Libor related trials scheduled in the US. Didn’t quite understand that comment in relation to two more people discussed in the PACER system whose cases don’t appear to be resolved.

I took a look at PACER for Mr. Paul Thomson (case 1:14-cf-00272-JSR-2). That docket does not have any details for his legal representation. I think that means he has not appeared in court yet.

A Reuters article says he was arrested in Australia this month (I assume that means November) and faces extradition to the U.S. I’ll guess the other man under indictment is in the same position: the long arm of the law has not yet reached out far enough to put cuffs on him.

So, turns out it is possible to persuade a jury in the U.S. that a banker committed a felony.

 

Written by Jim Ulvog

November 9, 2015, 7:11 am at 7:11 am

Posted in Other stuff

Tagged with ,

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