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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Wednesday, June 1, 2011

Goldman Sachs's Man: Fabrice Tourre

Maybe it is time to catch up with Goldman Sachs's Fabrice Tourre who was sued by the SEC for mortgage-securities fraud. The New York Times article excerpted below makes the point that one person alone could not have been solely responsible for all the fraud committed in the mortgage business prior to 2008. Mr. Tourre worked as a member of the Goldman Sachs team--a junior member at that. We would like to see the team members, or someone higher up, held responsible for fraudulent mortgage securities created and sold by Goldman Sachs.

(Click on the multimedia graphics chart beside the article to see the mostly civil fraud cases that have taken place so far. Criminality is not the focus of the investigators, so far.)

S.E.C. Case Stands Out Because It Stands Alone
By Louise Story and Gretchen Morgenson - The New York Times

At the height of the housing boom, the 26th floor of Goldman Sachs’s former headquarters on Broad Street in Lower Manhattan was the nerve center of Goldman’s fast-growing mortgage trading business.

Hundreds of employees worked closely in teams, devising mortgage-based securities — billions of dollars’ worth — that were examined by lawyers, approved by management, then sold to investors like hedge funds, commercial banks and insurance companies.

At one trading desk sat Fabrice Tourre, a midlevel 28-year-old Frenchman who was little known not just outside Goldman but even inside the firm. That changed three years later, in 2010, when he achieved the dubious distinction of becoming the only individual at Goldman and across Wall Street sued by the Securities and Exchange Commission for helping to sell a mortgage-securities investment, in one of the hundreds of mortgage deals created during the bubble years.

How Mr. Tourre alone came to be the face of mortgage-securities fraud has raised questions among former prosecutors and Congressional officials about how aggressive and thorough the government’s investigations have been into Wall Street’s role in the mortgage crisis.

Across the industry, “it’s impossible that only one person was involved with fraudulent activities in connection to the sales of these mortgage securities,” said G. Oliver Koppell, a New York attorney general in the 1990s and now a New York City councilman.

In the fall of 2009, when Mr. Tourre learned that he had become a target of investigators for helping to sell a mortgage security called Abacus, he protested that he had not acted alone.

That fall, his lawyers drafted private responses to the S.E.C., maintaining that Mr. Tourre was part of a “collaborative effort” at Goldman, according to documents obtained by The New York Times. The lawyer added that the commission’s view of his role “would have Mr. Tourre engaged in a grand deception of practically everyone” involved in the mortgage deal.

Indeed, numerous other colleagues also worked on that mortgage security. And that deal was just one of nearly two dozen similar deals totaling $10.9 billion that Goldman devised from 2004 to 2007 — which in turn were similar to more than $100 billion of such securities deals created by other Wall Street firms during that period.

While Goldman paid $550 million last year to settle accusations that it had misled investors who bought the Abacus mortgage security, no other individuals at the bank have been named. Now, however, as criticism has grown about the lack of cases brought by regulators, the scope of the inquiries appears to be widening. The United States attorney general, Eric H. Holder Jr., has said publicly that his lawyers were reviewing possible charges against other Goldman officials in the wake of a Senate investigation that produced reams of documents detailing other questionable decisions that were made in the firm’s mortgage unit.

The Senate inquiry was one of several in the past three years. These investigations by Congressional leaders and bankruptcy trustees — into the likes of Washington Mutual, Lehman Brothers and the ratings agencies — were undertaken largely to understand what had gone wrong in the crisis, rather than for law enforcement. Yet they uncovered evidence that could be a road map for federal officials as they decide whether to bring civil and criminal cases.

Read the entire article here


Anonymous said...

Geithner and Goldman, Thick as Thieves

Geithner’s priorities were all too obvious from his days in the Clinton administration’s Treasury Department when he worked first under former Goldman honcho Robert Rubin and then Lawrence Summers, who took six-figure speaking fees from Goldman and other banks while he was an adviser to candidate Obama. It was the recommendation of Rubin and Summers that landed Geithner the job as president of the New York Fed, where he faithfully followed the policy lead of Goldman-CEO-turned-Treasury-Secretary Henry Paulson.

It was back then and is now accurate to speak, as a New York Times headline once put it, of U.S. politics dominated by “The Guys From ‘Government Sachs’ ”—but on an international scale. From the crisis in Greece, where Goldman manufactured toxic tax-based derivatives with abandon, to its betting against the success of the mortgage-based derivatives that Goldman designed and sold to others, the company was nothing short of a massive wrecking ball in the international economy.

Anonymous said...

Anonymous said...

Imagine This:

Anonymous said...

Isn't (Goldman Accused of Withholding Lehman Emails) that fraud on the bankruptcy trustee?...isn't that a serious offense?

Joyce said...

Thank you all for the fine links.

Anonymous said...

Ibsen is smiling...different but the same!

An Enemy of the People

Anonymous said...

Just when maybe ya think something will happen:
More smoke and mirrors;;;;

Joyce said...

My opinion is that all the regulators and the justice system are fully compromised and cannot bring any criminal charges because they would implicate themselves by so doing--first for not acting and second for aiding and abetting the criminal behavior.

What is needed is an inquiry by an unbiased group of attorneys who will prosecute all the executives of all the banks that created CDOs that became junk and who will bring to justice all the bank executives that bet against the mortgage market while doing so. That includes Goldman Sachs. They only need to read the Levin/Coburn report.

It is very funny to see all these credit rating agencies rating each other when they are all culpable. Moody's rates Goldman Sachs; Goldman Sachs rates Fitch; Fitch rates Goldman Sachs. What does all that mean? The answer is NOTHING! They are all compromised in supporting criminal pursuits and they are laughing their fool heads off that we would take any of them seriously.

Joyce said...

Please ignore the last paragraph of the comment. It doesn't make sense.

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