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What Are NSA’s Standards for Surveilling Transnational Crime Organizations?

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Yesterday, the Italian magazine Panorama claimed that the NSA had wiretapped the Vatican.

I have some questions about the veracity of the report. NSA has denied it more vigorously than other allegations of tapping world leaders. Panorama is not known to have access to the Edward Snowden documents. One key claim — that the current Pope, Jorge Mario Bergoglio, has been surveilled since 2005 — was actually sourced to WikiLeaks in the story (In addition to cables on Argentine politics, Bergoglio shows up in a 2003 cable speculating on the possibility of a Latin American Pope).

All that said, I am intrigued by this claim.

Panorama said the recorded Vatican phone calls were catalogued by the NSA in four categories – leadership intentions, threats to the financial system, foreign policy objectives and human rights.

I did a quick review of WikiLeaks cables on the Vatican (remember, these are classified at no more than the Secret level, and therefore are not going to have any intercept information in them, and they of course stop at 2010). The human rights issues pertain to interfaith dialogue and the rights of Catholics in repressive countries, the Church’s role in anti-gay laws, and allegations of anti-Semitism (this cable, on the Church prioritizing unity and thereby endorsing Holocaust denial, is one of the few Secret ones). There are fewer that relate directly to the Church’s role in the financial system; though a good many cables with “financial” content relate to Syria or, especially, Lebanon, and include the Vatican because of its influence with Christian power brokers in the region (this cable, on Syrian money laundering, was forwarded to the Vatican mission for some reason).

But there two other reasons why the Vatican might be an NSA target based on those topics: its multi-decade cover-up of pedophilia (and the impact legal investigations and settlements might have around the world), and the Vatican’s role in money laundering. The recent disclosures of Vatican money laundering suggest Iraq, Iran, and Indonesia have used the bank, as well as the Italian mafia, but given its ties to Lebanon, I wouldn’t be surprised if it were also laundering money from that country, which is another close focus of the US’ own money laundering attention.

In other words, in addition to wiretapping the Vatican because it wields special influence in countries around the world (the leadership intentions and foreign policy objectives category), the US would have reason to surveil it because of what amount to Vatican actions that make it a Transnational Criminal Organization, completely apart from matters of faith.

That is, if NSA applied its apparent mandate to track TCOs indiscriminately.

But I bet you they don’t. While I am sure they track Latin American, African, and South Asian drug networks, I’m certain they track Russian mobsters who have ties to online crime, and I’m sure they are tracking and probably have an active role in the investigation of Yakuza’s ties to big Japanese banks (most of these are either named Treasury drug kingpin or TCO targets), I also believe if the NSA tracked transnational crime organizations generally, its efforts would be shut down tomorrow.

Imagine, for example, if in addition to using Title III wiretaps (though barely) and self-disclosure and evidence generated by other financial institutions in put-back suits, the NSA used its bulk collection to track JPMC’s international transfers to see whether any of it constituted “foreign intelligence,” and from that referred any evidence of a crime to the FBI? Imagine if the NSA were stealing all of JPMC’s transfer information, even outside its access to SWIFT, to see how JPMC laundered its world-destabilizing actions through multiple jurisdictions? And both JPMC and HSBC have a known history of material support for terrorism, which certainly ought to justify such spying (noting, of course, that I think JPMC did get spied on in conjunction with the Scary Iran Plot, which may have forced FinCEN to settle with it on other outstanding sanction violation issues).

They wouldn’t even need to track JPMC and other multinational banks in the name of transnational crime and terrorism; the Sovereign Wealth Funds of the world — both of volatile Middle Eastern countries, Asian targets, but even in Europe — have effectively become foreign policy entities. Do they track what Qatar and the Emirates do with their SWFs?

As I said, I doubt it. While I suspect as this scandal develops we’ll find more and more evidence that the NSA has spied on targets selected for their financial competition with the US and UK (we’ve already seen hints they collected intelligence on the Euro versus the dollar, Brazil’s competitive position vis as vis the US, for example), I also suspect if there were ever a hint that the NSA treated JPMC or HSBC like it did other TCO targets, it would get shut down in a matter of weeks.

Is This Why Banksters Don’t Go to Jail for Laundering Terrorist Finances?

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I’m in the middle of a deep dive in the Section 215 White Paper — expect plenty of analysis on it in coming attractions!

But I want to make a discrete point about this passage, which describes what happen to query results.

Results of authorized queries are stored and are available only to those analysts trained in the restrictions on the handling and dissemination of the metadata. Query results can be further analyzed only for valid foreign intelligence purposes. Based on this analysis of the data, the NSA then provides leads to the FBI or others in the Intelligence Community. For U.S. persons, these leads are limited to counterterrorism investigations.

The Primary Order released several weeks back calls these stored query results “the corporate store.” As ACLU laid out, the government can do pretty much whatever it wants with this corporate store — and their analysis of it is not audited.

All of this information, the primary order says, is dumped into something called the “corporate store.” Incredibly, the FISC imposes norestrictions on what analysts may subsequently do with the information. The FISC’s primary order contains a crucially revealing footnote stating that “the Court understands that NSA may apply the full range of SIGINT analytic tradecraft to the result of intelligence analysis queries of the collected [telephone] metadata.” In short, once a calling record is added to the corporate store, anything goes.

More troubling, if the government is combining the results of all its queries in this “corporate store,” as seems likely, then it has a massive pool of telephone data that it can analyze in any way it chooses, unmoored from the specific investigations that gave rise to the initial queries. To put it in individual terms: If, for some reason, your phone number happens to be within three hops of an NSA target, all of your calling records may be in the corporate store, and thus available for any NSA analyst to search at will.

But it’s even worse than that. The primary order prominently states that whenever the government accesses the wholesale telephone-metadata database, “an auditable record of the activity shall be generated.” It might feel fairly comforting to know that, if the government abuses its access to all Americans’ call data, it might eventually be called to account—until you read footnote 6 of the primary order, which exempts entirely the government’s use of the “corporate store” from the audit-trail requirement.

The passage from the White Paper seems to suggest there are limits (though it doesn’t explain where they come from, because they clearly don’t come from FISC).

This analysis must have a valid foreign intelligence purpose — which can include political information, economic information, espionage information, military information, drug information, and the like. Anything other countries do, basically.

But if the data in the corporate store pertains to US persons, the FBI can only get a lead “for counterterrorism purposes.”

At one level, this is (small) comfort, because it provides a level of protection on the dragnet use.

But it also may explain why HSBC’s US subsidiary didn’t get caught laundering al Qaeda’s money, or why JP Morgan always gets to self-disclose its support for Iranian “terrorism.” So long as the government chooses not to treat banks laundering money for terrorists as material support for terror, then they can consider these links (which surely they’ve come across in their “corporate store!) evidence of a financial crime, not a terrorist one, and just bury it.

I would be curious, though, whether the government has ever used the “corporate store” to police Iran sanctions. Does that count as a counterterrorism purpose? And if so, is that why Treasury “finds” evidence of international bank violations so much more often than it does American bank violations?

Five Additional Questions for Jim Comey

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Colleen Rowley has a great list of questions Jim Comey should be asked today in his confirmation hearing (I’ll be live-tweeting it, so follow the twitter feed over there. >>>>>>

Here are five questions I would add:

  1. The May 10, 2005 torture authorization you signed off (as well as the Combined of the same date one you objected to) on was retrospective. What were the circumstances of the treatment of this detainee? Was that detainee water-boarded, in spite of CIA claims only Abu Zubaydah, Ibn Rahim al-Nashiri, and Khalid Sheikh Mohammed were?
  2. Do you believe the High Value Interrogation Group (HIG) should be authorized to use “separation,” including modified sleep deprivation, to coerce confessions?
  3. Do you believe it legal or advisable to delay presentment for detainees interrogated by HIG so as to set up up to two weeks of unsupervised interrogation?
  4. FBI has used the Section 215 authorization — the same law used to collect every American’s phone data — to collect lists of common products that on very rare occasions have been used as precursors to explosives. They could and may well have used the same authority with pressure cookers. Is collecting such a broad sweep of innocent activity in pursuit of terrorists the best way to identify them? What do you believe the appropriate use of Section 215 authority is?
  5. Through the entire financial crisis, it appears the FBI did not use all the investigative tools available, including (with two or three notable exceptions) wiretaps and phone and Internet tracking, when investigating large financial institutions. This appears to be true even when, as with your former employer HSBC, the institution had clear ties to terrorists and Transnational Criminal Organizations. What tools do you believe appropriate to investigate large financial institutions and do you plan to change the approach to investigating financial crime?

What an Overbroad Section 215 Order Looks Like

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Screen shot 2013-06-05 at 10.02.05 PMGlenn Greenwald has a tremendous scoop, for the first time I know of publishing a Section 215 warrant — in this case one asking for all US-based traffic metadata from Verizon Business Services from April until July.

Now, I think that this actually affects just a subset of all Verizon traffic: the business-focused traffic rather than Verizon Wireless or similar consumer products most people subscribe to (and if that’s so, the shitstorm that is about to break out will be all the more interesting given that rich businessmen will be concerned about their privacy for once).

Also, this does not ask for call content. It asks only for metadata, independent of any identifying data.

In other words, they’re using this not to wiretap the conversations of Occupy Wall Street activists but to do pattern analysis on the telecom traffic of (I think) larger businesses.

The request does, however, ask for location data (and Verizon does offer bundles that would include both cell and cloud computing). So maybe the FBI is analyzing where all Verizon’s business customers are meeting for lunch.

My extremely wildarsed guess is that this is part of hacking investigation, possibly even the alleged Iranian hacking of power companies in the US (those stories were first reported in early May).

I say that because cybersecurity is a big part of what Verizon Enterprise (as I believe they now go by) sells to its business customers; the infographic above, warning of data breaches when you least expect it (heh), is part of one they use to fear-monger its customers. Energy consumers are one of its target customer bases. And the case studies it describes involve several Smart Grid projects. Precisely the kind of thing the government is most freaked out about right now.

After all, aside from Medicare fraud, the government simply doesn’t investigate businesses, ever. Certainly not the kind of bankster businesses we’d like them to investigate. One of the few things they investigate business activities for is to see if they’ve been compromised. Moreover, the Section 215 order requires either a counterintelligence or a counterterrorist nexus, and the government has gone to great lengths to protect large businesses, like HSBC or Chiquita, that have materially supported terrorists.

Anyway, that’s all a wildarsed guess, as I said.

Ah well. If the government can use Section 215 orders to investigate all the Muslims in Aurora, CO who were buying haircare products in 2009, I’m sure big business won’t mind if the government collects evidence of their crimes in search of Iran or someone similar.

Update: Note, this order seems to show a really interesting organizational detail. This is clearly an FBI order (I’m not sure who, besides the FBI, uses Section 215 anyway). But the FISA Court orders Verizon to turn the data over to the NSC. This seems to suggest that FBI has NSA store and, presumably, do the data analysis, for at least their big telecom collections in investigations. That also means the FBI, which can operate domestically, is getting this for DOD, which has limits on domestic law enforcement.

BREAKING: Globalization Is Dangerous

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Globalization is dangerous.

But not, as it turns out, because it has gutted the middle class. Not even because a globalized supply chain has made it easier for our rivals to sabotage our defense programs, or that a globalized supply chain has led to a loss of manufacturing capacity that threatens our defense, to say nothing of our distinctly American commercial sectors.

Rather, retired Admiral James Stavridis, in a more popularized version of a piece he wrote for a National Defense University volume on the topic, argues that “deviant globalization,” whether that of drug traffickers, terrorists, counterfeiters, or hackers, poses a rising threat.

Convergence may be thought of as the dark side of globalization. It is the merger of a wide variety of mobile human activities, each of which is individually dangerous and whose sum represents a far greater threat.

I’m sure it is a threat. But Stavridis makes the same mistake just about everyone else makes when they consider criminal globalized networks to be a security threat: they ignore that there is little these illicit networks do that licit ones didn’t already pioneer. They ignore that the only thing that makes them illicit is state power, the same state power that corporatized globalization has weakened.

In fact Stavridis’ fourth point telling how to combat deviant globalization is notable for what it’s missing.

Fourth, we must shape and win the narrative. Many have said there is a “war of ideas.” That is not quite the right description. Rather, the United States is a “marketplace of ideas.” Our ideas are sound: democracy, liberty, freedom of speech and religion — all the values of the Enlightenment. They have a critical role in confronting the ideological underpinnings of crime and terror. Our strategic communications efforts are an important part of keeping our networks aligned and cohesive.

You see it? In spite of using the metaphor of the market to describe the realm of ideas, Stavridis neglects to mention that one of our ideas, so-called capitalism (or the marketplace itself!), that value of Enlightenment, is precisely the logic that has made globalization imperative.

If the way to beat these criminal globalized networks is to compete ideologically, but the ideological foundation our elites cling to most desperately is the same one the criminal globalized networks are exploiting so spectacularly, haven’t we already lost the battle of ideas?

Stavridis’ choice to ignore capitalism is probably why he doesn’t get the problem with his call to “follow the money.”

Third, we must follow the money. Huge sums of cash from these trafficking activities finance terrorists and insurgents such as the Taliban, as well as corruption. The money is used to undermine fragile democracies. Efforts to upend threat financing must be fused with international initiatives, move across U.S. agency lines and have the cooperation of the private-sector institutions involved.

It is true that globalized cash flows undermine weak governments (the same ones that otherwise might make these criminal globalized networks illicit). But that’s at least as true of the money looted from poorer countries and deposited, completely legally per western elites, in secrecy regimes, or of the hot money that destabilizes the global economy more generally. Moreover, one of the biggest impediments to tracking the flows of criminal globalized networks is that the so-called licit multinational banks they use to transfer their money are more interested in the profits from the money than in cooperating with increasingly weak states. So long as HSBC can get away with a wrist slap, after all, why would any multinational bank give up its customer base to American authorities?

Stavridis ends his column by citing Hardy’s warning about icebergs.

Just over a century ago , the poet Thomas Hardy wrote “The Convergence of the Twain” about the collision of the Titanic and the iceberg that sank it. “And as the smart ship grew/ In stature, grace, and hue/ In shadowy silent distance grew the Iceberg too.” There is an iceberg out there in the form of weapons of mass destruction; what is most worrisome is the convergence of such a weapon with a sophisticated global trafficking route enabled by cybercrime and the cash it generates. That is the convergence we must do all in our power to prevent.

Stavridis almost gets it. He almost gets it that these global trafficking routes, whether deemed licit or illicit by increasingly weak states, are the iceberg that is looming.

It’s just that he chooses to ignore the iceberg he can see for the parts he can’t see.

Maybe Dzhokhar’s Buddies Just Wanted a Job at HSBC?

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A lot of people on Twitter are talking about how dumb-as-shit Dzhokhar Tsarnaev’s college buddies, Azamat Tazhayakov, Dias Kadyrbayev, and Robel Phillipos were when they allegedly removed evidence relating to the Boston Marathon bombing and threw it in the trash or (in the case of Phillipos) lied about those activities.

I’m not convinced, though.

I’m not defending what the young men did. Nor am I vouching for their intelligence. Nor am I saying they shouldn’t be prosecuted — they should!

But I’m having a hard time distinguishing what they did from what, say, HSBC did, for years. Aside from the fact that HSBC affirmatively helped terrorists, rather than just covered up that help. And aside from the fact HSBC made a billion dollars doing so.

As a reminder, where’s what HSBC did — eliciting nary a blink of an eye from the same DOJ that is now (rightly) prosecuting these dumb-as-shit kids. They were a key — perhaps the key — bank providing Saudi al-Rajhi bank cash dollars. Details emerged in 2001 that the bank had been providing the dollars terrorists used in their plots, including the 9/11 plot. It took four years for HSBC to begin to get worried about it. But it still only halted the dollar trade for al-Rajhi while its US regulator, OCC, looked into its money laundering practices (it says something about HSBC’s awareness of the sensitivity of this issue that they didn’t halt their other abundant money laundering activities).

And then, once OCC was out of its hair, HSBC moved back into the cash dollar business with al-Rajhi, a bank reportedly involved with the most spectacular terrorist acts of recent years.

Just HSBC’s brief exit from the cash business with al Rajhi is similar to what Dzhokhar’s dumb-as-shit buddies did when they put his backpack in the public trash. Covering up terrorism.

Read more →

Add Sovereign Citizens Who Have to Play by Rules HSBC Doesn’t

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Remember how HSBC facilitated massive money laundering, around the globe, for over a decade, but got away with a hand slap? Remember how a single check cashing store in LA got very different treatment?

Well, add sovereign citizens to the list of Americans who don’t get the treatment HSBC got.

A man known to reject government authority as a member of the “sovereign movement” was slammed with a federal sentence Wednesday of 98 months in prison and ordered to forfeit more than $1.29 million in assets.

Shawn Rice, 50, was convicted last July on one count of conspiracy to commit money laundering, 13 counts of money laundering, and four counts of failure to appear, the U.S. attorney for the district of Nevada said in a release.

Once again, after winning a harsh sentence, DOJ’s representative talked tough about the importance of prosecution.

“Persons who commit financial crimes victimize organizations, government and the public,” said U.S. attorney Daniel Bogden. “Our office and our federal partners will work jointly with local and state law enforcement to ensure that these persons are caught and prosecuted.”

If I weren’t officially on vacation, I’d check the docket on this, though for the moment I’ll accept that Rice warranted such tough treatment.

But these tough words would sure be more credible if DOJ consistently treated money launderers with this seriousness.

Sherrod Brown and Chuck Grassley Watch Frontline, Too

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Citing this line from Lanny Breuer in last week’s Frontline program,

I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.

Sherrod Brown and Chuck Grassley have sent a list of questions they want Eric Holder to answer by February 8.

The questions are:

  1. Has the Justice Department designated certain institutions whose failure could jeopardize the stability of the financial markets and are thus, “too big to jail”?  If so, please name them.
  2. Has the Justice Department ever failed to bring a prosecution against an institution due to concern that their failure could jeopardize financial markets?
  3. Are there any entities the Justice Department has entered into settlements with, in which the amount of the settlement reflected a concern that markets could be impacted by such a settlement?  If so, for which entities?
  4. Please provide the names of all outside experts consulted by the Justice Department in making prosecutorial decisions regarding financial institutions with over $1 billion in assets.
  5. Please provide any compensation contracts for these individuals.
  6. How did DOJ ensure that these experts provided unconflicted and unbiased advice to DOJ?

I’m interested in their focus on contractors. Has someone like Promontory Financial Group been making these decisions too?

In any case I await Holder’s non-responsive answer with bated breath.

Sheldon Adelson Should Have Saved His Cash

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When Mike Allen asked Sheldon Adelson in September why he had dumped so much money in what would be an unsuccessful attempt to help Republicans win in november, Adelson’s first reason was that he was being unfairly treated by DOJ.

Self-defense: Adelson said a second Obama term would bring government “vilification of people that were against him.” He thinks he would be at the top of that list and contends that he already has been targeted for his political activity.

Adelson’s Las Vegas Sands Corp. is being scrutinized by federal investigators looking into possible money-laundering in Vegas, and possible violation of bribery laws by the company’s ventures in China, including four casinos in the gambling mecca of Macau. (Amazingly, 90 percent of the corporation’s revenue is now from Asia, including properties in Macau and Singapore.)

The country’s leading megadonor is irritated by the leaks. “When I see what’s happening to me and this company, about accusations that are unfounded, that kind of behavior … has to stop,” he said.

Adelson gave the interview in part to signal that he intends to fight back in increasingly visible ways. Articles about the investigations appeared last month on the front pages of The Wall Street Journal and The New York Times. He maintains that after his family became heavily involved in the election, the government began leaking information about federal inquiries that involve old events, and with which the company has been cooperating.

The aim of the leaks, he argued, is “making me toxic so that they can make the argument to the Republicans, ‘This guy is toxic. Don’t do business with him. Don’t take his money.’ Not all government employees are leakers, but most of the leakers are government employees.”

Asked to response to Adelson’s comments, the Justice Department said it does not comment on, or confirm, investigations.

While Adelson blames DOJ for leaks, much of the outlines of his corrupt business doings came from public court filings.

One thrust of the investigation pertains to whether the fixer Adelson’s casino company used in China, Yang Saixin, had engaged in bribery. Another involves evidence that a Chinese-born Mexican businessman with ties to the Sinaloa cartel, Zhenli Ye Gon, laundered drug profits through the Venetian casino in Las Vegas (using HSBC). And while Adelson himself has not been implicated in those and other money laundering and bribery allegations, the breach of contract suit brought by his former Macau CEO, Steven Jacobs, alleges that Adelson was personally involves in orders that Jacobs extort Chinese officials and sustain a “prostitution strategy.”

And while there were hints just before the election that Adelson and his company would be treated just like every other MOTU–given a wrist slap–the WSJ yesterday described the signs of the inevitable settlement. There’s the hiring of former US officials to internally police money laundering (and, probably, to turn the Sands into an espionage asset).

Sands has recently hired three former FBI agents to strengthen anti-money-laundering efforts and improve the background checks the company does on VIP customers and junket operators, the people familiar with the matter said.

And there’s the promises to stop allowing customers to hide their identity.

The casino operator also will no longer allow gamblers to transfer funds from their bank accounts under an alias, according to a person familiar with the matter.

[snip]

Sands and other casino operators have allowed important clients to deposit money—on occasion millions of dollars at a time, in the case of Sands at least—in accounts in one country and use it in another for gambling, according to casinos executives and documents reviewed by The Wall Street Journal. The casinos say their systems are safe against money laundering.

But law enforcement authorities say they are concerned about the use of these types of transfers across international borders, particularly from junkets; without the more specific source-of-funds and other requirements that banks provide, those fund exchanges could carry a high risk of money laundering, they say.

As well as generalized compliance improvements.

In addition, the casino operator is retraining its staff on U.S. antibribery laws and on ways to avoid doing business with people and entities on the U.S. sanctions list, which includes alleged terrorists, narcotics traffickers, and other perceived threats with whom U.S. firms are banned from doing business, according to another one of the people.

This is, in short, precisely what we see every time the DOJ lets a big financial entity off of money laundering charges that small fry like check cashing store managers would get indicted and go to prison for.

So Adelson need not have spent those millions to try to defeat Obama. Obama’s DOJ was always unlikely to go after his company aggressively.

I could be wrong, but it appears as if Lanny Breuer is about to declare the Sands casinos systematically important and therefore too big to jail.

Once Again Jamie Dimon Gets Special Treatment

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Yesterday, the Office of the Comptroller of the Currency issued two orders to JP Morgan Chase, one related to its London Fail Whale, the other related to failures in its Bank Secrecy Act/Anti-Money Laundering compliance. With respect to latter order, OCC said, in part:

(1) The OCC’s examination findings establish that the Bank has deficiencies in its BSA/AML compliance program. These deficiencies have resulted in the failure to correct a previously reported problem and a BSA/AML compliance program violation under 12 U.S.C. § 1818(s) and its implementing regulation, 12 C.F.R. § 21.21 (BSA Compliance Program). In addition, the Bank has violated 12 C.F.R. § 21.11 (Suspicious Activity Report Filings).

(2) The Bank has failed to adopt and implement a compliance program that adequately covers the required BSA/AML program elements due to an inadequate system of internal controls, and ineffective independent testing. The Bank did not develop adequate due diligence on customers, particularly in the Commercial and Business Banking Unit, a repeat problem, and failed to file all necessary Suspicious Activity Reports (“SARs”) related to suspicious customer activity.

(3) The Bank failed to correct previously identified systemic weaknesses in the adequacy of customer due diligence and the effectiveness of monitoring in light of the customers’ cash activity and business type, constituting a deficiency in its BSA/AML compliance program and resulting in a violation of 12 U.S.C. § 1818(s)(3)(B).

That last one is the real peach. You see, in spite of the fact the order includes 22 pages of things JPMC “shall” do to fix this problem, the order did not include any fine. Remember, it has been less than 18 months since JPMC got caught–among other things–sending a ton of gold bullion to Iran in violation of sanctions. That time, at least, Treasury’s Office of Foreign Asset Controls fined JPMC, if only $88.3 million.

Still, here were are a year and a half later, with JPMC still refusing to police what it is helping its customers do, and the government is letting JPMC off with no fine.

Compare that to the treatment of Karen Gasparian, the manager of the G&A Check Cashing company out in LA. Today, he got sentenced to five years in prison for doing precisely what Jamie Dimon did: fail to comply with BSA/AML law. In his sentencing, he even submitted record of all the big banks that have skated for doing what he did, including HSBC’s 1.9 Billion wrist slap, and noted the disparity in treatment.

An even greater problem with the Government’s seeking a sentence of incarceration in this case is the disparity when compared to other instances of the same offense, or instances involving even more egregious conduct, such as much larger financial institutions conducting business with drug trafficking organizations and terroristic regimes like Iran. Time and time again, the United States Government has offered deferred prosecution agreements (and fines) to financial institutions whose conduct was exponentially more egregious than the conduct at issue here. Mr. Gasparian’s offense, while serious, was still far short of the conduct committed by these other institutions. Any sentence of incarceration in this case would be a loud proclamation that the rich and powerful receive one type of justice, while those less powerful receive another type.

The government, of course, insisted on enhancements to Gasparian’s sentence because his crime amounted to over $100,000 in a one year period (the government sent two confidential witnesses to cash checks at G&A, which is how they proved that amount).

Remember HSBC provided over $990 million in cash to a terrorist bank over a four year period. All that’s before you consider their money laundering for Mexican cartels and probable Russian mafia. Not a single HSBC employee was so much as indicted, much less sent to jail for five years or for a lifetime for material support for terrorism.

And now JPMC–and its “manager,” Jamie Dimon–not only get off without indictments, but without even a fine (at least not from OCC–OFAC may end up fining them).

The government submitted a bunch of sealed documents explaining why Gasparian should be treated so much more harshly than the big banks. I’m just going to assume the government explained what great intelligence work the big banks are doing to avoid being subjected to the rule of law.

Predictably, Lanny Breuer waved his dick around boasted about this conviction.

“Karen Gasparian, Humberto Sanchez and their company G&A Check Cashing purposefully thwarted the Bank Secrecy Act, making it easier for others to use G&A to commit illegal activity,” said Assistant Attorney General Breuer.  “They knew they were required to report transactions over $10,000, but deliberately failed to do so.  As this case shows, check cashing businesses must adhere to our anti-money laundering rules, or else pay the consequences.”

This is the guy who, just one month ago, failed to even mention he was letting a bank that sent hundreds of millions in cash to a terrorist bank off without any charges.

At this point, it’s beginning to look like DOJ’s disparate treatment is not just about preserving his buddies the CEOs. But it’s about eliminating the little competitors like G&A so the equally corrupt big banks can take over their markets.

Update: Adding this from the government’s sentencing motion. The government insisted that Gasparian do time … as a deterrent.

Because there are hundreds of check cashers in Los Angeles as well as an underlying health care fraud problem, it is more important that the sentence here be sufficient to promote respect for the law and general deterrence for the types of criminal activities defendant engaged in as well as the health care fraudsters. A significant sentence is also necessary to reflect the serious [sic] of the offense, deter criminal conduct, and protect the public from defendant.