Sunday, October 09, 2011

Taibbi on why Wall Street isn't in jail: "financial crimes don't feel real"

Matt Taibbi, he of the famous "Goldman Sachs as vampire squid" formulation, was on the Leonard Lopate Show Monday.

And that pointed me to his 2/16/11 Rolling Stone article headlined Why Isn't Wall Street in Jail? Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them.

Here's the close:
The mental stumbling block, for most Americans, is that financial crimes don't feel real; you don't see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They're crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let's steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They're attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone's claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality.
That's not exactly the Atlantic Yards story, but it's also not out of the ballpark. For example, what should we make of the lies presented to potential immigrant investors?

When do you restructure a deal?

Remember how Forest City Ratner, having pledged $100 million cash in 2005 for the rights to the Metropolitan Transportation Authority's Vanderbilt Yard, in 2009 convinced the agency (via its political patrons) to restructure the deal, putting down $20 million for the initial parcel needed for the arena block and agreeing to pay the rest over 22 years at a gentle interest rate?

How is that a bigfoot like Forest City can restructure a deal, but a Brooklynite accused of embezzlement cannot?

Consider the New York Times article Tuesday, Plea Deal in PTA Theft Case Stalls Over Terms of Restitution:
A Brooklyn judge refused on Monday to revise a plea offer to a former PTA treasurer accused of embezzling $82,000 from her daughter’s school, putting her one step closer to going to trial.

The offer, from the Brooklyn district attorney’s office, called for the former treasurer, Providence Hogan, to admit the theft and then pay back what she took from the PTA at Public School 29 in Cobble Hill between May 2008 and September 2010.

The agreement called for an immediate $40,000 payment and spread out the balance over four years.

Ms. Hogan’s lawyer, Stephen Flamhaft, made a counteroffer to the court on Monday calling for a $30,000 down payment followed by installments that would have had her pay the balance in three years. But Justice Suzanne Mondo of State Supreme Court in Brooklyn turned it down; according to Mr. Flamhaft, Justice Mondo said his client could afford to pay more.

“That’s her opinion,” he said. “That’s not accurate, though.”

Prosecutors have said Ms. Hogan, who owns Providence Day Spa on Atlantic Avenue, took the money to pay for fertility treatments and for the rent on her apartment and business, which stands 10 blocks from the school. She hid the theft by falsifying documents and writing unauthorized checks to herself from the PTA’s account, the authorities have said.

Ms. Hogan faces up to 15 years in prison if she is convicted of second-degree grand larceny, the top charge she faces.

Under the terms of the deal, Ms. Hogan would avoid prison and, instead, serve five years of probation once she had made full restitution to the school. If she failed to make all the payments in four years, though, she would face two to six years in prison.
(Emphases added)

I hold no brief for Hogan, but I'll suggest that Justice Mondo, who asserted that the accused could afford to pay more, was a lot tougher than the MTA when it negotiated with Forest City.

The developer surely could have afforded to pay more. It just didn't want to, because that cut into profits.

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