Book Excerpt: These Are The Fines I Remember (Part I)
Another book excerpt today. In this chapter I try to put some context around the scale of regulatory violations and penalties that I discussed in the intro.
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One Day In July
6,952 violations between January2000 and July 2022 is a significant number, and by the time anyone else reads this sentence there will have been more. (ed., as of October 19, 2022, there are 7,055!). Remember this is also only the United States. Nevertheless, humans are notoriously innumerate, we are okay with keeping track of three and possibly five or seven items. Here’s a picture with 10,000 dots I found with a box I added covering about 6,952.
How about some specific examples? That always helps. I could cherry pick the largest or most egregious or some other curated subset. But what I want to convey is the banality, the pervasiveness, the commonplace-ness, of financial crime at all levels from small companies to large companies to companies you thought of as dubious to those you, maybe, respected.
And to do that, I’m not going to pick. I’m going to let pure-ish chance select. As I write this it is July 2022. I could have written this chapter in June or August or any other month or year. It’s a bit like throwing a dart blindfolded or letting your financial adviser pick stocks–no, don’t do the second one (that’s called foreshadowing). Also, it is the summer time, and people in finance and government are on vacation, so I may come up empty–no financial crimes this month.
Nope.
US Department of Justice
Note, all text in italics in these sections on penalties are direct cut and paste from the relevant agencies’ web pages.
July 7, 2022 Addiction Treatment Facilities’ Medical Director Sentenced in $112 Million Addiction Treatment Fraud Scheme
July 8, 2022 Jury Convicts Doctor of Health Care Fraud Scheme
July 12, 2022 Two Financial Asset Managers Charged in Alleged $1.2 Billion Venezuelan Money Laundering Scheme
July 13, 2022 Jury Convicts Man of $600 Million Health Care Fraud, Wire Fraud, and ID Theft Scheme
July 19, 2022 California Man Sentenced to Over 11 Years for $27 Million [Paycheck Protection Program] PPP Fraud Scheme
July 19, 2022 Three Men Charged in Ecuadorian Bribery and Money Laundering Scheme
July 20, 2022 Justice Department Charges Dozens for $1.2 Billion in Health Care Fraud
July 21, 2022 My Big Coin Founder Convicted of Cryptocurrency Fraud Scheme
July 25, 2022 CEO of Titanium Blockchain Pleads Guilty in $21 Million Cryptocurrency Fraud Scheme
July 27, 2022 The Department of Justice, the Consumer Financial Protection Bureau (CFPB), and the Attorneys General of Pennsylvania, New Jersey, and Delaware announced today agreements to resolve allegations that Trident Mortgage Company (Trident), which is owned by Berkshire Hathaway Inc., engaged in a pattern or practice of lending discrimination by “redlining” in the Philadelphia metropolitan area, including neighborhoods in Philadelphia, Camden, and Wilmington. In the event you don’t recall, Berkshire Hathaway is Warren Buffet’s company. Trident to put $20 million towards fair housing. Also CFPB fine below. Are you excited to find out?
The medical ones are not fully financial in nature, but they have a large portion of monetary fraud involved, so I think we can keep them in the party.
The Office of the Comptroller of the Currency
Merely one consent order for the OCC, and they had to share with the CFPB. Still, better than nothing though.
July 14, 2022
The Office of the Comptroller of the Currency (OCC) today assessed a $125 million civil money penalty against Bank of America, N.A., for violations of law and unsafe or unsound practices relating to the bank’s administration of a prepaid card program to distribute unemployment insurance and other public benefit payments. The OCC also ordered the bank to provide remediation to consumers harmed by the bank’s practices and violations of law.[...]
The order requires the bank to provide remediation to harmed consumers whose access to unemployment benefits was denied or delayed. [...] failing to timely reimburse consumers for unauthorized transactions and wrongfully freezing or blocking prepaid card accounts. The order also requires the bank to take comprehensive corrective action to improve its risk management and oversight over the program as well as its contract review and approval process, and enterprise-wide complaints risk management.[...]
The OCC’s civil money penalty and remediation requirement is separate from, but coordinated with, the Consumer Financial Protection Bureau (CFPB). I’m saving the CFPB fine for the next section. Consider it a very short cliff hanger.
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But not the end of July's announced penalties. That was just the US DoJ and the OCC. Coming up we have the CFPB, SEC, FINRA, CFTC, Treasury, Fed Reserve, and some international spices to cover. That's too much for one post. More to come next time. See how many you remember or even heard of as we go through them. Consider it a game regulatory violation bingo--the least fun bar game since "free beer for every tooth filing extracted."