Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

SEC Destroys 9000 Fraud Files
Townhall.com ^ | August 18, 2011 | Mike Shedlock

Posted on 08/18/2011 6:26:16 AM PDT by Kaslin

Senator Chuck Grassley, Republican of Iowa, says SEC may have destroyed documents

“From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” said Sen. Chuck Grassley, Republican of Iowa, in a letter to the agency’s chairman, Mary Schapiro.

“It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what timeframe, and to what extent its actions were consistent with the law.”

Agency staff “destroyed over 9,000 files” related to preliminary agency investigations, according to a letter sent in July to Grassley, the top Republican on the Senate Judiciary Committee, and obtained by MarketWatch.

The allegations were made by SEC enforcement attorney, Darcy Flynn, in a letter to Grassley. Flynn is a current employee, and according to the letter, received a bonus for his past year’s work.

Flynn alleges the SEC destroyed files related to matters being examined in important cases such as Bernard Madoff and a $50 billion Ponzi scheme he operated as well as an investigation involving Goldman Sachs Group Inc. trading in American International Group credit-default swaps in 2009.

Flynn also alleged that the agency destroyed documents and information collected for preliminary investigations at Wells Fargo, Bank of America,, Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley, and the now-bankrupt Lehman Brothers.

The letter goes into particular detail about Deutsche Bank, the former employer of current SEC enforcement chief Robert Khuzami as well as former enforcement chiefs Gary Lynch and Richard Walker.

The allegations that the SEC destroyed documents were first reported by the Rolling Stone magazine in a report Wednesday.
Senator Grassley's Letter to the SEC

Inquiring minds may be interested in Senator Grassley's Letter to the SEC

Slap of the Wrist of MarketWatch

Once again I am irritated by articles and authors who quote other sources and do not have the decency to post a link. In this case the author is Ronald D. Orol, a MarketWatch reporter, based in Washington.

Orol should have caught that and if not the editors at MarketWatch should have caught it.

Is the SEC Covering Up Wall Street Crimes?

Please consider Rolling Stone: Is the SEC Covering Up Wall Street Crimes? by Matt Taibbi

Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

Under a deal the SEC worked out with the National Archives and Records Administration, all of the agency’s records – “including case files relating to preliminary investigations” – are supposed to be maintained for at least 25 years. But the SEC, using history-altering practices that for once actually deserve the overused and usually hysterical term “Orwellian,” devised an elaborate and possibly illegal system under which staffers were directed to dispose of the documents from any preliminary inquiry that did not receive approval from senior staff to become a full-blown, formal investigation. Amazingly, the wholesale destruction of the cases – known as MUIs, or “Matters Under Inquiry” – was not something done on the sly, in secret. The enforcement division of the SEC even spelled out the procedure in writing, on the commission’s internal website. “After you have closed a MUI that has not become an investigation,” the site advised staffers, “you should dispose of any documents obtained in connection with the MUI.”
That is the opening snip. The entire article is worth a read.

I rather suspect the SEC has safeguarded with perfect care the files on Martha Stewart, two-bit Joe, and blogger Bob.


TOPICS: Business/Economy; Editorial; Government
KEYWORDS: berniemadoff; coverup; davidkotz; kotz; madoff; sec; secfiles; secfraudfiles; secshreddergate; shreddergate; thesec

1 posted on 08/18/2011 6:26:20 AM PDT by Kaslin
[ Post Reply | Private Reply | View Replies]

To: Kaslin

Goldman Sachs is the biggest fraud company and behind every deal that has gone on in America - they need to be investigated and shut down!


2 posted on 08/18/2011 6:31:23 AM PDT by princess leah
[ Post Reply | Private Reply | To 1 | View Replies]

To: CutePuppy; ken5050
SEC accountant who bungled Madoff Ponzi probe gets bonus!?!
By JOSH MARGOLIN, NYP, 8/15/11

Peter Lamore in his Connecticut driveway.

EXCLUSIVE Peter Lamore, 39, was awarded a $1,200 payout last year, even though he and the higher-up who approved his bonus "were subject to potential disciplinary action at the time" for their dismally subpar performance in the Madoff case.......... Lamore -- a compliance officer in the SEC's New York City office during the flawed 2005 examination of Madoff and his cooked books -- was never actually punished for his shoddy work. But government investigators found that Lamore's review of Madoff was "inappropriately focused, conducted without obtaining critical independent data, closed with unresolved issues remaining, and relied too heavily on" Madoff's bogus explanations, according to their Aug 2009 report.

Lamore was nominated for his bonus just two weeks after he was taken to task along with others in the 2009 report -- and nine months after Madoff's Ponzi scheme burst into the headlines. Amazingly, Lamore had already been promoted to SEC staff accountant in 2006 thanks, in part, to his inspection of Madoff's books, auditors found. --snip--

3 posted on 08/18/2011 6:42:53 AM PDT by Liz ( A taxpayer voting for Obama is like a chicken voting for Col Sanders.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Kaslin
Our rulers want the public to know nothing about what they are doing. They are printing money to make themselves filthy rich. To them, it's none of our business.

Get back to work and pay your taxes!!!

4 posted on 08/18/2011 6:52:23 AM PDT by CharlyFord (t)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Kaslin

Who in the Obama Admin are they protecting?


5 posted on 08/18/2011 6:52:43 AM PDT by Darksheare (You will never defeat Bok Choy!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Kaslin

All of their FRIENDS and SUPPORTERS!!


6 posted on 08/18/2011 6:52:54 AM PDT by Ann Archy (Abortion is the Human Sacrifice to the god of Convenience.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Kaslin

as more and more Democrats realize that Obama may be about to ride a greased rail out of there, it’s a golden age for people who own shredding companies in DC.


7 posted on 08/18/2011 6:54:44 AM PDT by Buckeye McFrog
[ Post Reply | Private Reply | To 1 | View Replies]

To: Kaslin

? Did they get paid by the Banks to destroy the documents?

Or, ...did the administration receive huge contributions for destroying the documents?

Or, ...did someone in a high place at the SEC receive the promise of an important job is he destroyed the documents?

What a mess.


8 posted on 08/18/2011 7:03:31 AM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Kaslin

There are no public agencies that protect public interest.


9 posted on 08/18/2011 7:08:58 AM PDT by Tempest (Ruining the day of corporate butt kissers everywhere.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Tempest

And keep this is mind...after all the mortgage fraud, not ONE senior official from any bank, mortgage company, investors group, advisor or rater went to jail. NOT ONE.


10 posted on 08/18/2011 7:36:20 AM PDT by Mouton (Voting is an opiate of the electorate. Nothing changes no matter who wins..)
[ Post Reply | Private Reply | To 9 | View Replies]

To: Mouton
"And keep this is mind...after all the mortgage fraud, not ONE senior official from any bank, mortgage company, investors group, advisor or rater went to jail. NOT ONE."

___________________________________________________

It's called regulatory capture the regulators at the SEC are promised jobs in the Treasury or at JP Morgan or Goldman so they "forget" to look into things.

When an industry gets so powerful that it can capture it's own regulators it's over.


11 posted on 08/18/2011 8:10:06 AM PDT by Minus_The_Bear
[ Post Reply | Private Reply | To 10 | View Replies]

To: Minus_The_Bear

I have a different opinion.

Eventually someone with guts gets into office and all of the miscreants go to jail.

If no pols have the guts, the people will rise up with pitchforks and torches.

It has happened before; it will happen again.


12 posted on 08/18/2011 8:47:20 AM PDT by darth
[ Post Reply | Private Reply | To 11 | View Replies]

To: darth
I am of the exact same opinion.

We don't need MORE regulation. We just need honest regulators who won't be bribed.

There is a difference.
13 posted on 08/18/2011 8:58:15 AM PDT by Minus_The_Bear
[ Post Reply | Private Reply | To 12 | View Replies]

To: Kaslin

The fox is in the henhouse.


14 posted on 08/18/2011 10:12:55 AM PDT by ridesthemiles
[ Post Reply | Private Reply | To 1 | View Replies]

To: Texas Fossil

Oh please, we don’t have time for this.

We are too busy surfing porn sites.


15 posted on 08/18/2011 11:21:11 AM PDT by Zuse
[ Post Reply | Private Reply | To 8 | View Replies]

To: darth
the people will rise up with pitchforks and torches

Yes, long long overdue.

The POLs do not sufficiently fear the Tea Party supporters yet.

16 posted on 08/18/2011 12:47:25 PM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
[ Post Reply | Private Reply | To 12 | View Replies]

To: Liz

wow...a $1200 hundred dollar bonus!!


17 posted on 08/18/2011 12:55:16 PM PDT by Osage Orange (HE HATE ME)
[ Post Reply | Private Reply | To 3 | View Replies]

To: Kaslin

The revolution is on-going comrades!

Long Live CHE!!!

IMHO


18 posted on 08/18/2011 12:57:23 PM PDT by ripley
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zuse

I told another member here that after we wrest power from these criminals, I would love a gig exposing the criminals, helping bring them to trial, conviction, sentencing and punishment. It is needed. That is the only way this will ever end.

This could make the House on UnAmerican Activities proceedings look like a cake walk. Treason is a very serious charge.


19 posted on 08/18/2011 1:01:32 PM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
[ Post Reply | Private Reply | To 15 | View Replies]

To: Kaslin
"Never let a serious crisis go to waste"...

And if there isn't one present...make one.

Joining the Federal Reserve at the hip with private banking institutions was like covertly networking every computer in America....with one that has the worse viruses imaginable.

The crooks have been playing their games for decades, something though tells me things accelerated during with the Clinton administration.

When 911 occurred, and during the subsequent investigations into how the terror networks might have been wired in(financing).....they must have uncovered a lot of home grown financial terrorists...and many had help in high places.

This level of corruption of course could not see the light of day, as so many prominent folks would be taken down.

...better to just get rid of the evidence.

20 posted on 08/18/2011 1:21:12 PM PDT by RckyRaCoCo (I prefer liberty with danger to peace with slavery, IXNAY THE TSA!...P.S. Why did FR ZOT Frantzie?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Liz
Lamore -- a compliance officer in the SEC's New York City office during the flawed 2005 examination of Madoff and his cooked books -- was never actually punished for his shoddy work. But government investigators found that Lamore's review of Madoff was "inappropriately focused, conducted without obtaining critical independent data, closed with unresolved issues remaining, and relied too heavily on" Madoff's bogus explanations, according to their Aug 2009 report.

Never let it be said that the liberal vultures don't take care of their own.

So much for the SEC's IG H. David Kotz [cover-up] report which "found" that Madoff's audits and investigations were done by "untrained, unseasoned, indifferent, inexperienced and incompetent" clerical personnel who were either "intimidated or enthralled" by Madoff himself or "received no support and were actively discouraged from forcing the issue".
(Ref: Report Details How Madoff's Web Ensnared S.E.C. - NYT, by David Stout, 2009 September 03)

So what did David Kotz know and when did he know it? And why is he the one who is now going to investigate the "SEC shreddergate"? So that he can execute another cover-up of "incompetency and inexperience," including possibly his own? That's like having Christopher Dodd and Barney Frank investigate the root causes of real estate / mortgage market fiasco and then write the laws and regulations to "fix it".

From SEC Files Were Illegally Destroyed: Lawyer Says - CNBC / NYT, by Edward Wyatt, 2011 August 18

(tags: SEC CORRUPTION UNITED STATES)

It appears that Darcy Flynn is still with the SEC, but has asked for federal protection under the whistle-blower statute. H. David Kotz, the SEC Inspector General who wrote a report on SEC's Madoff "investigations," will investigate the "SEC shreddergate" and expects to issue a report by the end of September.

21 posted on 08/19/2011 4:03:51 PM PDT by CutePuppy (If you don't ask the right questions you may not get the right answers)
[ Post Reply | Private Reply | To 3 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson