“The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare: Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking” by Matt Taibbi November 6, 2014

Click for Source Rollingstone Article by Matt Tiabbi

JP MORGAN HEAVY SECRET KEPT FOR 8 YEARS = Alayne Fleischmann couldn’t take it any longer saying I was “watching an old lady get mugged on the street. I thought, ‘I can’t sit by any longer.'”

Fleischmann = A tall, thin, quick-witted securities lawyer in her late thirties, with long blond hair, pale-blue eyes and an infectious sense of humor that has survived some very tough times.

Fleischmann = Struggle to find work despite some striking skills and qualifications, a common condition for being a whistle-blower.

Fleischmann = Central witness in $Many Billion JPM SCAM = One of the biggest white-collar crimes in USA history. = She possessing secrets JPM CEO Jamie Dimon in 2013 paid $9 billion to HIDE FORM PUBLIC.

2006 Fleischmann = A deal manager at JPM first witnessed and tried to stop a “massive criminal securities fraud” in the bank’s mortgage operations.

Fleischmann = HONORED a confidentiality agreement and kept her mouth shut since 2006 = “My closest family and friends don’t know what I’ve been living with. Even my brother will only find out for the first time when he sees this interview.”

JPM, LIKE GOLDMAN, BofA, Citigroup, and Morgan Stanley, SCAMS CRASHED and cratered the global economy — biggest banks stole on a grand scale.

ISSUE #1 = The GREAT Pains JPM and the USA DOJ took to silence Fleischmann — Blocked at every turn by COOPTED SEC + COURTS + JPM = JPM use its billions to bury her evidence and AG Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up.

Fleischmann = “Every time I had a chance to talk, something always got in the way.” HOLDER IS A ELITISTS’ CROOK SERVING BIG BANKS.

Fleischmann = Watched Holder’s DOJ strike a series of historic settlement deals with Chase, Citigroup and Bank of America. = CASH FOR SECRECY WITH NO CRIMINAL TRIALS OR JUDGES OR TRANSPARENCY OR PUBLIC KNOWLEDGE = ALL SECRET DEALS with “statements of facts,” that had none of the real FACTS. JAMIE DIMON PAID BILLIONS TO WALK FREE FROM HIS MANY CRIMES.

Holder = SOON GONE BACK TO HIS SCAMMING FOR ELITISTS = DOJ is wrapping up its final SECRET settlements — sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption.

Fleischmann = “I could be sued into bankruptcy. I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”

Fleischmann = An excellent student with high ideals attended Cornell Law School and then worked on Wall Street — surprising her family and friends.

Fleischmann = “helped lead a group that wrote briefs to the Human Rights Chamber for those affected by ethnic cleansing in Bosnia-Herzegovina. My whole life prior to moving into securities law was human rights work.”

Fleischmann = Had student loans to pay off, and so Wall Street was the answer. She found she had a genuine passion for securities law and felt strongly she was doing a good thing.

Fleischmann = “There was nothing shady about the field back then. It was very respectable.”

2006 Fleischmann = A few years at a white-shoe law firm, she ended up at JPM as the SUB-PRIME Mortgage Scam market was white-hot.

SCAM METHOD = The 5 Big Banks, including JPM furiously bought up huge pools of home loans and repackaging them as mortgage securities (DERIVATIVES). Banks sold the resulting synthesized FRAUD JUNK PAPER to every TOM, DICK, AND GRANNY AND PENSION FUNDS around the world telling them it was the SAFEST INVESTMENT THEY COULD MAKE “AAA” rated. BUT THE BANKS BET AGAINST THEIR OWN CLIENTS BECAUSE THEY NEW THE PAPER WAS CRAP. SCAM worked for years but THE TOWER OF CHIOT HIT THE FAN IN 2008 and everyday people around the world lost $TRILLIONS for their retirement, a house, or an education for the kids.

Fleischmann = As a transaction manager functioned as a kind of quality-control officer. Her main job was to make sure the bank didn’t buy spoiled merchandise (SUB-PRIME CHIOT) before it got tossed into the meat grinder and was sold out the other end to Bank Victims.

2006 Few months later Fleischmann = Testified in a DOJ deposition

At same time JPM hired a new Manager for diligence in charge of reviewing and clearing loans. Fleischmann quickly ran into a problem with this manager superior who told everyone to stop sending him e-mails. — Fearful of putting anything in writing on the mortgage scams.

2006 after the “no e-mail” policy, Fleischmann and her group evaluated a packet of home loans worth about $900 million. The quickly began to notice serious problems with the loans — Even the dates looked suspiciously old — Not Normal as banks tried get the crap sold at warp speed — A huge red flag for JPM to buy loans that were 7 or 8 months old. = “I could lose everything. But if we don’t start speaking up, we’re going to get the biggest financial cover-up in history.” — These loans had either been previously rejected by JPM, or were what are known as “early payment defaults” (EPDs) — likely returned after the borrowers missed multiple payments — Reason the dates were so old — Bottom of the mortgage barrel — JPM called them “scratch and dent” loans — JPM later admitted to reselling $100s of Millions worth of those crappy loans to investors as “Alt-A” — Painting up “scratch-and-dent loans” with Alt-A is like selling painted up junkyard wrecks as new cars.

Fleischmann = “Everything that I thought was bad at the time, turned out to be a million times worse.” 40% were based on overstated incomes (5% MAX ACCEPTABLE).

Fleischmann + Others = Raised objections to the toxic loans = Suddenly the others began changing their reports. = “What happened is the head diligence manager started yelling at his team, berating them, making them do reports over and over, keeping them late at night” until the loans started clearing.

2006 Dec 11th Diligence managers marked 33% loan as “stated income unreasonable for profession” = Inevitable high number of defaults = High-ranking executives were copied on this report.

2006 Dec 15th JPM sales executive held a lengthy meeting diligence guys and finally one caved under the pressure = “He had his hands up and just said, ‘OK,’ and he cleared it.” = Soon afterward, the error rate in the pool had magically dropped below 10% from 33%.

Fleischmann = Testified she approached a managing director after that meeting and pleaded with him to reconsider selling high-risk loans as low-risk securities would be committing fraud. “You can’t securitize these loans without special disclosure about what’s wrong with them, and if you make that disclosure, no one will buy them.” But JPM knowingly peddled THE CRAP-scratch-and-dent loans to investors without disclosing the obvious defects with the underlying loans. JPM later admitted to the Conversation and that her warning was ignored when the bank sold those loans off to investors.

2007 Fleischmann = Sent a long letter to another managing director warning him of the consequences of reselling these bad loans as securities and gave detailed descriptions of breakdowns in JPM’s diligence process. JPM lawyers nickname “The Howler” But “It used to be if you wrote a memo, they had to stop, because now there’s proof that they knew what they were doing. But when the DOJ doesn’t do anything, that stops being a deterrent. I just didn’t know that at the time.”

2008 Fleischmann = Was quietly dismissed in a round of layoffs.

Later proof appeared that her bosses knew all along that the boom-era mortgage market was rotten. September 2008, as the market was crashing, Dimon boasted in Fortune article titled “Jamie Dimon’s SWAT Team” that he knew well before the meltdown that the subprime market was toast. The story tells of Dimon ordering a dump of the bank’s subprime holdings in October 2006. “ This stuff could go up in smoke!” = 2 full months before the bank rammed through the dirty GreenPoint deal over Fleischmann’s objections, JPM’s CEO was aware that loans like this were too dangerous for JPM itself to own. Dimon = A PROVEN LYING SCAMMER.

2010 Dimon testified before the Financial Crisis Inquiry Commission and them the exact opposite story, portraying poor JPM leadership was duped, just like the rest of us.

JAMIE DIMON told Commission = “In mortgage underwriting somehow we just missed, you know, that home prices don’t go up forever.”

Fleischmann = Found out what Dimon said years later and was shocked. Since her confidentiality agreement at JPM didn’t bar her from reporting a crime, but the problem was that she couldn’t prove that Chase had committed a crime without knowing whether those bad loans had been sold.

2011 Turned out JPM was selling those rotten dog-meat loans all over the place. A single lawsuit by a single angry litigant that suffered massive losses = Group of credit unions. One invested $135 million and found 40% of the loans in that deal were PURE CRAP = $51 Million in losses in First Year. JPM did deal after deal with the same CRIMINAL methodology. It’s theft on a scale that blows the mind.

2012 Fleischmann living in Canada after leaving JPM, was working at a law firm in Calgary when the phone rang = “Hi, I’m from the SEC. You weren’t expecting to hear from me, were you?”

Obama formed the Residential Mortgage-Backed Securities Working Group that operated like a kind of regulatory Justice League, combining investigators from the SEC, the FBI, the IRS, HUD and a host of other federal agencies including New York Attorney General Eric Schneiderman. Many observers hoped that finally something would be done about the crimes that led to the crash. Most of the applicable statutes of limitations had either expired or were about to expire.

FACT: “…the state waited far too long to look at these cases and is now taking its sweet time investigating, while the last statutes of limitations run out.” — Eliot Spitzer

FACT: SEC wasn’t investigating JPM’s Fraud but was just checking boxes.

Fleischmann = Never received any follow-up phone calls, even though she told the investigator that she was willing to tell the SEC everything she knew about the systemic fraud at JPM.

ODDLY, the SEC focused on a single transaction involving a mortgage company called WMC. “I kept trying to talk to them about GreenPoint,” Fleischmann says, “but they just wanted to talk about that other deal.”

2013 SEC fined JPM $297 million for Misrepresentations in the WMC deal = A classic piecemeal, cherry-picking style of justice. = “kid-gloves approach that the DOJ and the SEC take with Wall Street is …indefensible. They typically charge only one offense when there are dozens. It would be like charging a serial murderer with a single assault and giving them probation.” — Dennis Kelleher

2012 Fleischmann’s hopes were raised again = Pair of interviews with civil litigators from the U.S. attorney’s office in the Eastern District of California, based in Sacramento. = Lead attorney “sounded like he had been a securities lawyer for 10 years. This actually looked like his idea of fun – like he couldn’t wait to run with this case.” — Fleischmann gave the team detailed information about everything she’d seen and she assumed it wouldn’t be long before the bank was hauled into court.

OUTRAGEOUS: DOJ Holder helped JPM bury the evidence September 24th, 2013 — Cancelled an announced sweeping civil-fraud charges against the bank and no complaint was filed. Later reports show Dimon personally called the Associate Attorney General, the third-ranking DOJ official and asked to reopen negotiations to settle the case out of court — DIMON is NO ordinary citizen with the POWER TO CANCEL THE LAW. But Dimon did just that. “And he didn’t just call the prosecutor, he called the prosecutor’s boss,” Fleischmann says. Dimon offered $3 billion to settle the case and was turned down, he went to Holder’s office and upped the offer, but apparently not by enough.

Fleischmann, in Vancouver looking for work, saw a Wall Street Journal headline on her iPhone: JPMorgan Insider Helps U.S. in Probe. The story said that the government had a key witness, a female employee willing to provide damaging testimony about Chase’s mortgage operations. Fleischmann was stunned — she had no idea she was a major part of the case against JPM — effectively outed in the newspapers. “The stress started to build after I saw that news. Especially as I waited to see if my name would come out and I watched my job possibilities evaporate.”

Fleischmann = Later realized the government wasn’t interested in having her testify against JPM in court but instead, the DOJ Holder was using her evidence, as a bargaining chip to extract more hush money from Dimon. It worked. Within weeks, Dimon had upped his offer to roughly $9 billion in a “$13 billion settlement,” hailing it as the biggest white-collar regulatory settlement in American history.

JAMIE avoided PRISON and JPM avoided civil liability, but DOJ could pursue a further criminal investigation against the bank = A carefully contrived fiction that survived to this day. $4 billion was largely an accounting falsehood called “consumer relief” NEVER PAID. “It’s not real,” says Fleischmann. = A terrible deal for the country = JPM insinuate its innocence.

Holder blew off the idea of showing the unprecedented settlement to a judge and carefully crafted to bypass the court system. . . .”DOJ and JPM were trying to avoid disclosure of their dirty deeds and prevent public scrutiny of their sweetheart deal.” = DOJ gave JPM immunity in exchange for FAKED $Billions = JPM emerged with barely a scratch. JPM got a $7 Billion tax write-off + JPM’s share price soared 6% on news of the settlement — adding $12+ Billion in value to shareholders = JPM made money on the deal. JPM laid off 7,500 lower-level employees + compensation rose 4% for employees + DIMON was awarded a 74% raise to a CRIMINAL with the biggest regulatory penalty ever.

Fleischmann knew The criminal investigation was going nowhere.

The government’s failure to speak to Fleischmann lends credence to a theory about the Holder-Dimon settlement: It included a tacit agreement from the DOJ not to pursue criminal charges in earnest. = Outrageous

Back in 2010, Lawyer revealed Goldman Sachs wanted a full release from liability in a dozen crooked mortgage deals, while the SEC didn’t want to give the bank such a big public victory. The two sides quietly agreed to a grimy compromise: Goldman agreed to pay $550 million to settle a single case, and the SEC privately assured the bank that it wouldn’t recommend charges in any of the other deals.

Fleischmann = Waited for the DOJ to call while JPM lawyers were going to tremendous lengths to keep her muzzled.

Major institutional investors sued JPM to recover $MILLIONS lost in investing in JPM’s fraud-ridden home loans.

2013 October A Employees’ Retirement Fund asked a federal judge to force JPM to grant access to current and former employees, including Fleischmann, whose status made headlines in The Wall Street Journal and other major media outlets.

2013 October A Employees’ Retirement Fund asked a federal judge to force JPM to grant access to current and former employees, including Fleischmann, whose status made headlines in The Wall Street Journal and other major media outlets.

JPM attorney told the court Fleischmann couldn’t testify to anything of importance and Judge Francis HONORED JPM LAWYERS and rejected the Retirees’ request for access to Fleischmann and her evidence. + Other JPM VICTIMIZED investors also tried to speak to Fleischmann. JUDGE said JPM must turn over Fleischmann’s name, BUT JPM stalled FOR MONTHS.

January 2014 Chase suddenly settled with the Pittsburgh bank out of court for an undisclosed amount. Months after being ordered to allow Fleischmann to talk, they once again paid a stiff price to keep her testimony out of the public eye.

JPM’s determination to hide its own dirt while forcing Fleischmann to keep her secret was becoming more and more absurd.

Fleischmann – Had a hard time looking for work as prospective employers knew she had worked on project with the biggest regulatory fine in the history of capitalism. She couldn’t even tell them that she’d tried to keep the bank from committing fraud.

Despite all the JPM MANIPULATIONS, Fleischmann had faith the DOJ would make things right. = “I guess I was just a trusting person. I wasn’t cynical. I kept hoping.”

Fleischmann happened to see a video of a Holder speech titled “No Company Is Too Big to Jail.” Holder rejected of the idea that large financial institutions would receive preferential treatment from his Justice Department. + A few sentences later he argued that one must apply a special sort of care when investigating supersize banks, tweaking the rules so as not to upset the world economy. Holder was saying, regulators have to agree not to allow automatic penalties to kick in, so that bad banks can stay in business.

Fleischmann winced at Holder’s three-faced rhetoric and helped criminal companies survive crimes that otherwise might have triggered crippling regulatory penalties. Her rage mounted as Holder said “I am resolved to seeing [the investigations] through.” Fleischmann translated to: “I will personally stay on to make sure that no one can undo the cover-up that I’ve accomplished.”

Fleischmann then decided to break her silence. “I tried to go on with the things I was doing, but I just stopped sleeping and couldn’t eat,” she says. “It felt like I was trying to keep this secret and my body was literally rejecting it.”

Even if the investigators build strong cases against executives who oversaw JPM’s fraud, Holder or whoever succeeds him can still make the whole thing disappear by negotiating a soft landing for the company. “That’s the thing I’m worried about,” Fleischmann says. “That they make the whole thing disappear. If they do that, the truth will never come out.”

September 2014 Holder’s lack of prosecutions of top executives on grounds sometimes bad things just happen without actual people being responsible. a”Responsibility remains so diffuse, and top executives so insulated,” Holder said, “that any misconduct could again be considered more a symptom of the institution’s culture than a result of the willful actions of any single individual.” = people don’t commit crimes, corporate culture commits crimes!

Fleischmann, for her part, had begun to find the whole situation almost funny.

“I thought, ‘I swear, Eric Holder is gas-lighting me,’ ” she says.

Fleischmann can pinpoint exactly how her bosses at JPM committed criminal fraud: It’s highlighted right there in the documents; “We lawyers love flags” and POST-ITS throughout the massive documents. The proof is easily there for all the elements of the crime as defined by federal law – the bank made material misrepresentations, it made material omissions, and it did so willfully and with specific intent, consciously ignoring warnings from inside the firm and out.

She wants the prosecution done as the statute of limitations for wire fraud has not run out against the bank’s executives. She has no financial interest other than wanting the truth out — an epic ordeal just to get to the point of being able to open her mouth and tell a truth or two — Risking everything to take that last step. = “The assumption they make is that I won’t blow up my life to do it,” Fleischmann says. “But they’re wrong about that.”

Great for Fleischmann that it’s finally out, but the likely final verdict is a Pyrrhic victory. — After all this JPM remain more ascendant than ever. The people who stole all those billions are still in place. And the bank is more untouchable than ever. JPM stock price has gone up since the settlement and flirts weekly with five-year highs. Truth is one thing you might get to hear it from time to time. But justice is different, and still far away.


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