On Thursday Goldman Sachs, the powerful Wall Street investment firm, hit the trifecta in a way that says a lot about who really gets justice in America.
First, the Department of Justice announced it would not be pursuing criminal charges against the bank or its employees over the toxic mortgage-backed derivatives it unloaded on a sucker German bank while helping hedge fund honcho John Paulson who was shorting those very same securities.
Then, the Securities and Exchange Commission said it won’t take any action against the firm in another $1.3-billion subprime mortgage deal in which Goldman was involved.
Finally, the Manhattan District Attorney criminally charged Sergey Aleynikov, a programmer who left the bank, with theft of Goldman’s secret trading software after a previous federal conviction on the same charges had been overturned by an appeals court.
The DOJ said it couldn’t meet “the burden of proof” of guilt beyond a reasonable doubt to charge Goldman criminally in the case involving the notorious ABACUS CDO, which got the bank into hot water during some brutal hearings a couple of years ago before Sen. Carl Levin’s Senate Permanent Subcommittee on Investigations.
Also in 2010, the firm paid $550 million in a settlement with the SEC over the same CDO. Besides that penalty, which was less than 10% of the firm’s 2010 profits of $8.35 billion, Goldman has gone scot-free for its conduct in the financial crisis, along with practically every major US bank and Wall Street firm.
That’s not true for poor Sergey Aleynikov, who had served a year of an eight-year federal sentence on charges of stealing critical code behind Goldman’s super-secret high-frequency trading software. But in February a federal appeals court found that, as The Wall Street Journal reported, “his actions weren’t a crime under the laws for which he was convicted,” so his felony conviction was thrown out.
But on Thursday, the Manhattan DA charged Aleynikov on two closely related felony counts. Here’s what The New York Times wrote:
It is unusual for federal and state prosecutors to bring criminal charges against a defendant connected to the same set of facts. The Fifth Amendment of the Constitution prohibits double jeopardy, or being tried twice for the same crime, but the “dual sovereignty doctrine” permits different jurisdictions — in this case, the United States and New York State — to pursue charges for the same conduct… Under rare circumstances, however, federal and state prosecutors can be deemed in violation of the Fifth Amendment.
Manhattan DA Cyrus R. Vance Jr. was in high dudgeon. “This code is so highly confidential that it is known in the industry as the firm’s ‘secret sauce,’” he huffed.
Now I don’t know all the facts of these cases, and it should be a crime to steal intellectual property—even if it’s from the likes of Goldman. And federal prosecutors may have honestly decided they just didn’t have the evidence to convict Goldman employees criminally. Goldman Sachs, too, deserves the presumption of innocence.
But Eric Holder’s DOJ has said the same thing time and time again, as an excess of caution or sheer timidity has kept it from bringing a single case against a major Wall Street executive or firm. Or maybe it was just sheer cronyism, as I wrote about here yesterday.
Meanwhile, Aleynikov, who has far fewer resources and much less clout than Goldman does, has borne the full onslaught of state power while Goldman floats comfortably above the fray. As his lawyer put it:
If you’re Sergey Aleynikov, you’re wondering right now why would I ever leave Russia to come to the United States.
In Russia, of course, Aleynikov might have had to face only the wrath of Vladimir Putin. But this is America and he’s dealing with Goldman Sachs.