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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

Thursday, September 29, 2011

Goldman Sachs Wins Two Rounds--Why is That?

Because the Department of Justice is dragging its feet in prosecuting Goldman Sachs for its role in defrauding investors by selling them CDOs that were rated as valuable but then turned to junk resulting in the transfer of wealth from pensions, savings and mortgages of ordinary citizens to the bank's bonus and salary pools; because the SEC seems only interested in fining Goldman Sachs for its "mistakes" in selling CDOs and profiting with CDSs rather than prosecuting them for fraud; and because we, the public, have to depend on individuals and individual groups to bring Goldman Sachs to justice by suing them, it is especially sad, no galling, to see two lawsuits being deemed inadmissible and being dismissed.

These judgements tell us that Goldman Sachs can get away with fraudulent behavior and no Goldman Sachs executives will ever be prosecuted for their accounting control fraud. Corruption has crept into all the crooks and crannies of the system, it seems.

When trying to understand how Goldman Sachs can be judged as not having committed fraud or not having engaged in misrepresentation of its products, one of which is called Davis Square VI, you wonder whether there will ever be justice. The old canard that the buyer was "a sophisticated investor" should not be brought out as a defense because it sounds like the defense that Goldman Sachs uses for itself.

The SFGate article by Bob Van Voris tells us that the lawsuit brought against Goldman by Landesbank Baden-Wuerttemberg over CDO losses has been dismissed by Judge Pauley:
"Pauley said about 79 percent of the mortgages underlying Davis Square were below prime and at an increased risk of default. He ruled that LBBW failed to allege specific facts to support its claims for fraud and unjust enrichment. He also said the bank was a sophisticated investor that accepted the risks of its investment." (SFGate)
Others, such as Janet Tavakoli, have found Goldman Sachs wanting. In a Business Insider piece, she discusses the CDOs that GS created and it is not a pretty picture. You may want to follow the links in her article including from the excerpt below:
"The German bank makes an excellent point. The portfolio backing Davis Square VI before the September 2008 initial taxpayer bailout of AIG, can be found on my web site via this link: Davis Square VI."
The other disappointing judgement regarding Goldman Sachs is described in News Daily by Jonathan Stempel. The Board of Directors of Goldman Sachs "has won a dismissal of a lawsuit seeking to recover billions of dollars of bonus payouts and other compensation awarded for 2009." The shareholder who brought the suit is the Central Laborers' Pension Fund. The suit could be seen as infighting within the company, but, still, justice seems thwarted:
"In his ruling, Justice Bernard Fried dismissed the lawsuit with prejudice, saying the allegations 'do not provide any basis for the conclusion that the board acted for any purpose other than the advancement of the company's interests.'"
But that is the whole point!! The advancement of the company's interests was Goldman's sole purpose: it is their quest for money at the expense of anyone else that makes Goldman Sachs what it is. And this judge gives that excuse as ample reason for Goldman Sachs not to share in the profits it gained through its fraudulent maneuverings. Wow! Who can beat that defense?


Dirtyrats said...

Michael Krieger: Rebellion Has Arrived in America

While carefully
observing those areas are always important to a macro investor such as
myself, when you are smack in the middle of a Fourth Turning they take
on an increased level of importance. What has shielded the U.S. from a
lot of the social strife sweeping the rest of the globe at the moment
has been the U.S. dollar’s reserve status since this allows us to print
seemingly infinite amounts of paper dollars and shove them down the
throats of the rest of the world for their resources. This keeps the
populace fat, happy and most importantly asleep and apathetic. Well I am
pleased to announce that those days are OVER. The American populace is
now in the very beginnings of a state of open peaceful rebellion against
the criminal oligarchic mafia that runs the nation through fraud and
corruption. The status quo is likely to become increasingly defensive as
a result and may lash out aggressively like a cornered rat, but they
cannot and will not win.

Weredyingjamiescrying said...

Jamie Dimon’s Shameful Spouting about ‘anti-American’ Basel III regulations
DateThursday, September 29, 2011 at 9:04AM

There are few things more cringe-inducing than a government-subsidized
bank CEO spouting self-serving, entitlement-laden idiocy to the world
just because he and his bank might be subject to some extra
constraints. That hasn’t stopped JPM Chase CEO Jamie Dimon from acting
like a spoiled, sociopathic brat while characterizing proposed Basel
III capital requirements and regulations as ‘anti-American’ at every

They are not ‘anti-American’ but globally risk-mitigating in a time of
widespread economic Depression, a point lost in the haze of Dimon’s

Basel I and II enabled European banks and townships and pension funds
to purchase AAA securities extensively. American banks went into
manufacturing over-drive to oblige, creating 75% of the $14 trillion
of mortgage-related assets between 2003-2008. Related risk and loss
continue to proliferate the globe. Basel III goes further towards
refining capital requirements to contain damage.

Dimon doesn’t want a capital surcharge for big banks, or higher
capital requirements for US mortgage securities, because that might
entail further examination of his bank holdings, not because the
excess capital would be a hardship. Nearly $1.6 trillion of excess US
bank capital is sitting on the Federal Reserve books right now, doing
nothing productive or job-producing.

Here’s what’s really anti-American – big banks receiving extreme
federal assistance while the rest of the country is crushed, loan
refinancing and other foreclosure reducing negotiations are anemic,
and both private and public sectors can’t finance enough job growth to
alter our horrific unemployment or poverty situation.

Itsonebigclub said...

Crony Capitalism: $737 Million Green Jobs Loan Given to Nancy Pelosi's Brother-In-Law

On SolarReserve's website is a list of "investment partners," including the "PCG Clean Energy & Technology Fund (East) LLC." As blogger American Glob quickly discovered, PCG's number two is none other than "Ronald Pelosi, a San Francisco political insider and financial industry polymath who happens to be the brother-in-law of Nancy Pelosi, the Minority Leader of the United States House of Representatives."

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