As Part of Confirmation Process, Loretta Lynch Suggested DOJ Didn’t Have Enough Evidence to Prosecute HSBC

The WSJ has a story reporting what we long pretty much knew: DOJ decided not to prosecute HSBC for helping drug kingpins (this report, like most others and like DOJ’s settlement itself, forgets to mention HSBC also materially supported terrorism) because doing so might create global financial havoc.

U.S. Justice Department officials overruled their prosecutors’ recommendation to pursue criminal charges against  HSBC Holdings PLC over money-laundering failings, according to a House committee report prepared by Republicans that sheds new light on the bank’s 2012 settlement.

The report, which was reviewed by The Wall Street Journal and prepared by the Republican staff of the Financial Services Committee, concluded that former Attorney General Eric Holder overruled the internal recommendation and subsequently misled Congress about the Justice Department’s decision not to prosecute the U.K. bank.

“Rather than lacking adequate evidence to prove HSBC’s criminal conduct, internal Treasury documents show that DOJ leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank ‘could result in a global financial disaster,’ ” the 282-page report stated.

[snip]

Holder later said those comments were misconstrued and that the Justice Department doesn’t believe any institution is too large to face legal punishment. “If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought,” Mr. Holder said at a 2013 House hearing.

The report, which was expected to be released Monday, concluded those comments were misleading because lower-level prosecutors had recommended the department prosecute HSBC, according to Treasury Department emails subpoenaed by the committee.

The report blames Eric Holder for the decision, not Loretta Lynch, who oversaw the case as US Attorney. Indeed, her name doesn’t appear in the WSJ story at all.

But given the claim that line prosecutors believed they had plenty of evidence to charge HSBC, consider how Lynch answered a question about the topic during her confirmation process.

38. As United States Attorney for the Eastern District of New York, you helped secure nearly $2 billion from HSBC over its failure to establish proper procedures to prevent money laundering by drug cartels and terrorists. You were quoted in a DOJ press release saying, “HSBC’s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the U.S. financial system.”

You stated that the bank’s “willful flouting of U.S. sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in [Office of Foreign Assets Control]-prohibited transactions.” Still, no criminal penalties have been assessed for any executive who may have been involved.

a. Did you make any decision or recommendation on charging any individual with a crime?

i. If so, please describe any and all decisions or recommendations you made.

ii. Please explain why such decisions or recommendations were made.

b. If you did not make any decision or recommendation on charging any individual with a crime, who made the decision not to prosecute?

RESPONSE: On December 11, 2012, the Department filed an information charging HSBC Bank USA with violations of the Bank Secrecy Act and HSBC Holdings with violating U.S. economic sanctions (the two entities are collectively referred to as “HSBC”). Pursuant to a deferred prosecution agreement (“DPA”), HSBC admitted its wrongdoing, agreed to forfeit $1.256 billion, and agreed to implement significant remedial measures, including, among other things, to follow the highest global anti-money laundering standards in all jurisdictions in which it operates. As the United States District Judge who approved the deferred prosecution found, “the DPA imposes upon HSBC significant, and in some respect extraordinary, measures” and the “decision to approve the DPA is easy, for it accomplishes a great deal.” Although grand jury secrecy rules prevent me from discussing the facts involving any individual or entity against whom we decided not to bring criminal charges, as I do in all cases in which I am involved, I and the dedicated career prosecutors handling the investigation carefully considered whether there was sufficient admissible evidence to prosecute an individual and whether such a prosecution otherwise would have been consistent with the principles of federal prosecution contained in the United States Attorney’s Manual.

I want to reiterate, particularly in the context of recent media reports regarding the release of HSBC files pertaining to its tax clients, that the Deferred Prosecution Agreement reached with HSBC addresses only the charges filed in the criminal violations of the Bank Secrecy Act for failures to maintain an adequate anti-money laundering program and for sanctions violations. The DPA explicitly does not provide any protection against prosecution for conduct beyond what was described in the Statement of Facts. Furthermore, I should note the DPA explicitly mentions that the agreement does not bind the Department’s Tax Division, nor the Fraud Section of the Criminal Division. information, which are limited to violations of the Bank Secrecy Act for failures to maintain an adequate anti-money laundering program and for sanctions violations. The DPA explicitly does not provide any protection against prosecution for conduct beyond what was described in the Statement of Facts. Furthermore, I should note the DPA explicitly mentions that the agreement does not bind the Department’s Tax Division, nor the Fraud Section of the Criminal Division. [my emphasis]

To be fair to Lynch, hers was basically a non-answer. She said she and career prosecutors review the evidence. She implied that there was insufficient admissible evidence to prosecute, but did not say it.

But if the WSJ report is correct (and we should find out soon enough) in fact at least her prosecutors recommended prosecuting.

DOJ Thinks Releasing Omar Mateen’s ISIS Allegiance Claims It Released Last Week Will Revictimize the Victims

Yesterday, NPR reported that people investigating the Orlando mass shootings increasingly believe his attack may have had nothing to do with ISIS.

In fact, intelligence officials and investigators say they’re “becoming increasingly convinced that the motive for this attack had very little — or maybe nothing — to do with ISIS.”

Speaking on Weekend Edition Saturday, Dina says that al-Qaida and ISIS-inspired attacks tend to follow a different pattern. She explains:

“We know that during the attack the gunman posted messages on Facebook saying he was doing this on behalf of ISIS. But officials have yet to find any of the precursors usually associated with radicalization. They’ve interviewed dozens of people who either knew him or had contact with Mateen.

“And they say that they’ve yet to find any indication that he became noticeably more religious, which is one of the indicators of radicalization. He still was going to the same mosque. The way he dressed didn’t change. His relationship with his family didn’t change in any way. And these are all typically warning signs that parents and friends and educators are told to look for if they’re worried that someone they’re close to is radicalizing.”

She adds “this isn’t science,” but so far the signs of radicalization aren’t there, which has led investigators to wonder whether the 29-year-old invoked the name of ISIS to garner more publicity for his deadly attack.

I’ve been suggesting not only that Mateen was likely motivated for other reasons — but that FBI likely missed those cues because they were evaluating him for one and only one kind of threat, an Islamic terrorist rather than an angry violent man threat.

[I]t seems that when a Muslim guy invents a terrorist tie explicitly saying he wants the FBI to come after him in response so he can martyr himself protecting a particular image of his life — “He said he hoped that law enforcement would raid his apartment and assault his wife and child so that he could martyr himself” — the Bureau might think a little more critically about what is going on.

Instead, it appears, the FBI assessed Mateen for one and only one thing: whether his bogus claims of ties to terrorist organizations were real. There have been a slew of articles, such as this one or this one, wondering why the FBI didn’t “identify” Mateen as a “real” terrorist in its two investigations of him. But it appears the FBI was assessing only whether he was likely to commit violence because of–and with the support of–an Islamic terrorist group. It appears they weren’t assessing whether he was, like the overwhelming majority of men who commit mass shootings in this country, really screwed up, expressing it in violent ways, and seeking attention with such actions.

It is true that Islamic extremists want to attack this country. It is also true that far, far more Americans die when men carry out mass killings because they’re fucked up and begging for attention. If you’re Muslim, the easiest way to get attention right now is to say that word, “ISIS,” because it’s a guarantee law enforcement and politicians will give that killing more due then they might give the next disturbed mass shooter.

Of course, the apparent fact that investigators have now come to agree with me means that those who started screaming ISIS right away — and, importantly, leaking and officially revealing news that Mateen claimed affiliation with ISIS (and other conflicting terrorist groups) on his 911 call — means the people who rushed out the ISIS explanation in fact did ISIS’ propaganda work for them, giving them credit for a mass killing that was really your garden variety mass killing conducted by an angry man.

Which is why this is so batshit. After blowing off Florida’s open record laws for a week, DOJ will finally release his 911 transcripts. But, according to Loretta Lynch, they’re going to edit out the references to ISIS so as to avoid “revictimizing” the victims.

A week after the worst mass shooting in U.S. history, Attorney General Loretta Lynch said a portion of Orlando shooter Omar Mateen‘s calls with hostage negotiators will be released Monday.

“We’ll be releasing a partial transcript of the calls between the killer and the hostage negotiators so people can, in fact, see the type of interaction that was had there,” Lynch told ABC News’ Jonathan Karl on “This Week” Sunday.

The Attorney General says she’ll travel to Orlando on Tuesday to get an on-the-ground perspective on the investigation.

“I say partial because we’re not going to be, for example, broadcasting his pledges of allegiance. We are trying not to re-victimize those who went through that horror,” she added. “We’re trying to get as much information about this investigation out as possible, and we want people to provide information that they have to us.”

If releasing these claims of affiliation would “revictimize” the victims, then releasing them in the first place served to victimize them. So the much better approach would be to release the full transcripts and admit the Department fucked up, both in its assessment of a potential mass killer, and in rushing to blame ISIS in the first place. Not to mention that this will just feed conspiracy theories.

If DOJ fucked up — and the claim this could revictimize people is tacit admission it seriously fucked up — then admit that and make it right. Pay the political consequences of admitting that our obsessive focus on terrorism has distracted us from the more general, and therefore more lethal, problem with mass killings. Don’t try to pretend there’s a good reason for suppressing the very same claims you made a big deal of a week ago.

If DOJ now believes the claims served to do nothing more than give Mateen’s rampage more attention — and it was a key part of generating that attention — then it needs to come clean.

Update: One more point on this. Releasing the full transcript would reveal how non-credible the ISIS claim was, appearing as it did with a claim of affiliation with al-Nusra, which would make it even clearer that FBI shouldn’t have started telling everyone about the ISIS claim.

Update: Here’s the transcript from Meet the Press.

LORETTA LYNCH:

Yes, I’ll be going to Orlando on Tuesday to continue my briefings in the case. Actually though what we are announcing tomorrow is that the F.B.I. is releasing a partial transcript of the killer’s calls with law enforcement from inside the club. These are the calls with the Orlando P.D. negotiating team who were trying to ascertain who he was, where he was, and why he was doing this, all the while the rescue operations were continuing. That’ll be coming out tomorrow and I’ll be headed to Orlando on Tuesday.

CHUCK TODD:

Including the hostage negotiation part of this?

LORETTA LYNCH:

Yes. It will be primarily a partial transcript of his calls with the hostage negotiators.

CHUCK TODD:

You say partial. What’s being left out?

LORETTA LYNCH:

Well, what we’re not going to do is further proclaim this individual’s pledges of allegiance to terrorist groups and further his propaganda.

CHUCK TODD:

So we’re not going to hear him talk about those things?

LORETTA LYNCH:

We will hear him talk about some of those things, but we’re not going to hear him make his ascertains of allegiance and that. This will not be audio. This will be a printed transcript. But it will begin to capture the back and forth between him and the negotiators. We’re trying to get as much information about this investigation out as possible. As you know, because the killer is dead, we have a bit more leeway there. And so we will be producing that information tomorrow.

 

Hillary’s Bold Plan to Financially Penalize Recidivist Super-Predators

The other day Hillary promised she would appoint Attorneys General like Eric Holder and Loretta Lynch. “I will appoint an Attorney General who will continue the courageous work of Eric Holder and Loretta Lynch.” Given that the comments came at an Al Sharpton event, I assumed the comment meant to invoke Holder and Lynch’s efforts to reform criminal justice and, presumably, their even more successful support for civil rights.

Nevertheless, it was a disturbing comment, given that Holder and Lynch have also both coddled the bankers who crashed our economy. Indeed, when Hillary tries to defend her huge donations from bankers, she always points to Obama’s even huger ones, and insists that there’s no evidence he was influenced by them. But the Obama DOJ record on bank crime is itself the counter to Hillary’s claim those donations didn’t influence the President.

But then, last night, Hillary said something even more outrageous, which I take to be a solid promise to her funders they’ll continue to get special treatment before the law. Amid a comment shifting from Too Big to Fail into the serial settlements the banks have signed for their crimes, Hillary took the bold step of calling for financial penalties for the people directing that crime.

CLINTON: Dana, let me add here that there are two ways to at this under Dodd-Frank, which is after all the law we passed under President Obama, and I’m proud that Barney Frank, one of the authors, has endorsed me because what I have said continuously is, yes, sometimes the government may have to order certain actions. Sometime the government can permit the institution themselves to take those actions. That has to be the judgement of the regulators.

But, there’s another element to this. I believe strongly that executives of any of these organizations should be financially penalized if there is a settlement.

(APPLAUSE)

CLINTON: They should have to pay up through compensation or bonuses because we have to go after not just the big giant institution, we have got to go after the people who are making the decisions in the institutions.

Granted, under Holder and Lynch, those courageous Attorneys General Hillary would model her own pick on, the banksters haven’t even been asked to do this much.

But the fact that Hillary thought a great punishment for those harming the country with their serial crime wave is to fine them is a testament that she doesn’t even see the underlying crimes.

This is behavior that has continued over years, often after previous settlements. If anyone can be called a super-predator, it’s the bankers who toy with millions of people’s livelihoods and savings to make a buck. If there were a Three Strikes law for bankers most of these guys would be looking at life imprisonment.

And yet Hillary’s bold plan is not to incarcerate them, but instead to take a little bit of their money.

On the Coming Showdown over Promiscuous Sharing of EO 12333 Data

A number of outlets are reporting that Ted Lieu and Blake Farenthold have written a letter to NSA Director Mike Rogers urging him not to implement the new data sharing effort reported by Charlie Savage back in February. While I'm happy they wrote the letter, they use a dubious strategy in it: they suggest their authority to intervene comes from Congress having "granted" NSA authority to conduct warrantless collection of data.

Congress granted the NSA extraordinary authority to conduct warrantless collection of communications and other data.2

2 See Foreign Intelligence Surveillance Act and the Patriot Act.

As an initial matter, they've sent this letter to a guy who's not in the chain of approval for the change. Defense Secretary Ash Carter and Attorney General Loretta Lynch will have to sign off on the procedures developed by Director of National Intelligence James Clapper; they might consult with Rogers (if he isn't the one driving the change), but he's out of the loop in terms of implementing the decision.

Furthermore, the Congressionally granted authority to conduct warrantless surveillance under FISA has nothing to do with the authority under which NSA collects this data, EO 12333. In his story, Savage makes clear that the change relies on the [what he called "little-noticed," which is how he often describes stuff reported here years earlier] changes Bush implemented in the wake of passage of FISA Amendments Act. As I noted in 2014,

Perhaps the most striking of those is that, even while the White House claimed “there were very, very few changes to Part 2 of the order” — the part that provides protections for US persons and imposes prohibitions on activities like assassinations — the EO actually replaced what had been a prohibition on the dissemination of SIGINT pertaining to US persons with permission to disseminate it with Attorney General approval.

The last paragraph of 2.3 — which describes what data on US persons may be collected — reads in the original,

In addition, agencies within the Intelligence Community may disseminate information, other than information derived from signals intelligence, to each appropriate agency within the Intelligence Community for purposes of allowing the recipient agency to determine whether the information is relevant to its responsibilities and can be retained by it.

The 2008 version requires AG and DNI approval for such dissemination, but it affirmatively permits it.

In addition, elements of the Intelligence Community may disseminate information to each appropriate element within the Intelligence Community for purposes of allowing the recipient element to determine whether the information is relevant to its responsibilities and can be retained by it, except that information derived from signals intelligence may only be disseminated or made available to Intelligence Community elements in accordance with procedures established by the Director in coordination with the Secretary of Defense and approved by the Attorney General.

Given that the DNI and AG certified the minimization procedures used with FAA, their approval for any dissemination under that program would be built in here; they have already approved it! The same is true of the SPCMA — the EO 12333 US person metadata analysis that had been approved by both Attorney General Mukasey and Defense Secretary Robert Gates earlier that year. Also included in FISA-specific dissemination, the FBI had either just been granted, or would be in the following months, permission — in minimization procedures approved by both the DNI and AG — to conduct back door searches on incidentally collected US person data.

In other words, at precisely the time when at least 3 different programs expanded the DNI and AG approved SIGINT collection and analysis of US person data, EO 12333 newly permitted the dissemination of that information.

What Bush did just as he finished moving most of Stellar Wind over to FISA authorities, was to make it permissible to share EO 12333 data with other intelligence agencies under the same kind of DNI/AG/DOD approval process already in place for surveillance. They've already been using this change (though as I note, in some ways the new version of EO 12333 made FAA sharing even more permissive than EO 12333 sharing). And Savage's article describes that they've intended to roll out this further expansion since Obama's first term.

Obama administration has been quietly developing a framework for how to carry it out since taking office in 2009.

[snip]

Intelligence officials began working in 2009 on how the technical system and rules would work, Mr. Litt said, eventually consulting the Defense and Justice Departments. This month, the administration briefed the Privacy and Civil Liberties Oversight Board, an independent five-member watchdog panel, seeking input. Before they go into effect, they must be approved by James R. Clapper, the intelligence director; Loretta E. Lynch, the attorney general; and Ashton B. Carter, the defense secretary.

“We would like it to be completed sooner rather than later,” Mr. Litt said. “Our expectation is months rather than weeks or years.”

All of which is to say that if Lieu and Farenthold want to stop this, they're going to have to buckle down and prepare for a fight over separation of powers, because Congress has had limited success (the most notable successes being imposition of FAA 703-705 and Section 309 of last year's intelligence authorization) in imposing limits on EO 12333 collection. Indeed, Section 309 is the weak protection Dianne Feinstein and Mark Udall were able to get for activities they thought should be covered under FAA.

Two more points. First, I suspect such expanded sharing is already going on between NSA and DEA. I've heard RUMINT that DEA has actually been getting far more data since shutting down their own dragnets in 2013. The sharing of "international" narcotics trade data has been baked into EO 12333 from the very start. So it would be unsurprising to have DEA replicate its dragnet using SPCMA. There's no sign, yet, that DEA has been included under FAA certifications (and there's not, as far as we know, an FAA narcotics certificate). But EO 12333 sharing with DEA would be easier to implement on the sly than FAA sharing. And once you've shared with DEA, you might as well share with everyone else.

Finally, this imminent change is why I was so insistent that SPCMA should have been in the Brennan Center's report on privacy implications of EO 12333 collection. What the government was doing, explicitly, in 2007 when they rolled that out was making the US person participants in internationally collected data visible. We've seen inklings of how NSA coaches analysts to target foreigners to get at that US person content. The implications of basing targeting off of SPCMA enabled analysis under PRISM (which we know they do because DOJ turned over the SPCMA document, but not the backup, to FISC during the Yahoo challenge), currently, are that US person data can get selected because US persons are involved and then handed over to FBI with no limits on its access. Doing so under EO 12333 will only expand the amount of data available -- and because of the structure of the Internet, a great deal of it is available.

Probably, the best way to combat this change is to vastly expand the language of FAA 703-705 to over US person data collected incidentally overseas during next year's FAA reauthorization. But it will take language like that, because simply pointing to FISA will not change the Executive's ability to change EO 12333 -- even secretly! -- at will.