If you haven’t already, you should check out the article by The New Yorker, “How Ivanka Trump and Donald Trump, Jr., Avoided a Criminal Indictment.” To be brief, the Trump family was under investigation in 2012 by the Manhattan District Attorney’s office for misleading potential buyers about their Trump SoHo property.
This is being overly concise, but the investigation was dropped after Trump’s attorney made a $25,000 donation to the campaign of the Manhattan District Attorney, Cyrus Vance.
That report by The New Yorker was essentially overshadowed in the media cycle due to another story related to Cyrus Vance. Harvey Weinstein’s lawyer donated $10,000 to Vance’s campaign days after the sexual assault case against Weinstein was dropped.
Anyhow, that monetary figure of $25,000 is a relevant number as it was the amount of money donated from the Donald J. Trump foundation to the Political Action Committee (PAC) of Florida Attorney General, Pam Bondi. Bear in mind, Pam Bondi personally sought a donation from Donald Trump six days before it was received and this occurred while her staff was considering a case against Trump University. Predictably, that case never came to fruition and Bondi was named as a top member of Trump’s transition team.
To be clear, it’s illegal for charities to make political donations. Furthermore, Trump’s organization didn’t properly disclose the source of the contribution by listing another group with a similar name. Despite this horribly unethical and illegal behavior, Donald Trump was merely fined $2,500 by the IRS.
The issue of campaign finance receives a rather cursory level of media attention during every presidential election cycle. However, there are numerous lower-level races, the type that only policy wonks seem to follow, in which the issue is virtually ignored by the press. Unfortunately, these elections fly under the radar of the average voter, such as District Attorney or State Attorney General, even though these are positions that have a tremendous impact on our society.
During the campaign, Donald Trump openly stated that he personally knew the ins and outs of how special interests have corrupted the system. After all, with a smirk, he also alluded to his own role in this systemic corruption, without providing exact details. Hence, that type of rhetoric appealed to his base because they believed that he would reform the system.
Obviously, that hasn’t happened and that brings us back to the present with the latest articles from The New Yorker. This is fantastic investigative journalism. In fact, the content is so impressive that it may leave you wishing that our government officials were acting in the same manner.
Here’s the bitter truth. Often times, the heavy lifting of an important investigation gets spiked at the end by an ambitious bureaucrat. In both of these stories, the Manhattan District Attorney overruled his staff and dropped the case. Suffice it to say, the prison industrial complex is a finely tuned machine as long as the defendants aren’t wealthy white-collar criminals or the social elite.
The Manhattan District Attorney’s Office, like most others in the country, has a history of implementing a two-tiered justice system. Nonetheless, Cyrus Vance had received a lot of positive press as a “progressive” prosecutor by simply recognizing the problems. For instance, in 2014 he allowed the Vera Institute to examine the complete records of his office to examine racial disparities, which earned him a lot of kudos in liberal circles.
However, Vance’s office has seemingly only practiced “progressivism” when it involved wealthy defendants, such as when it dropped the case against Harvey Weinstein despite possessing an audio tape of Weinstein admitting to committing the crime.
The Manhattan District Attorney’s Office has aggressively prosecuted misdemeanor offenses, with minorities being the primary targets. Last year, black and Hispanic defendants were convicted of marijuana possession in Manhattan at rates of 51% and 46% respectively. Whereas, white defendants were only convicted 23% of the time for the same offense. That was the widest disparity in all five boroughs.
This is the same office that is supposed to preside over Wall Street, yet not a single executive of a “Too Big to Fail” bank faced criminal charges after the 2008 mortgage-fraud scandal. The lack of action can’t be blamed on a lack of evidence. Instead, there were several highly-credible whistleblowers who came forward with solid information that should have resulted in putting many white-collar criminals behind bars and creating legal consequences for predatory behavior in the future.
In particular, Matt Taibbi profiled a JPMorgan Chase whistleblower, Alayne Fleischman, who singlehandedly gave a slam-dunk case to the DOJ. However, in the end, Jamie Dimon negotiated a settlement in which the company avoided any criminal charges, didn’t have to admit to any wrongdoing, and the financial penalty essentially served as a tax write-off.
That wasn’t a one-off situation as there were several other whistleblowers who risked their careers all for naught, such as Citigroup executive Richard M. Bowen. However, time and again, the DOJ avoided Wall Street’s power players like the plague. Instead, New York’s prosecutors have built solid careers by targeting vice crimes, such as drugs, gambling, and prostitution. After all, it’s a wise career decision for bureaucrats to avoid confronting our nation’s most powerful white-collar criminals because there’s a better payday in the future. (This is one of the themes of my book series, Rackets.)
One of the central causes behind this systemic corruption is the revolving door between government and the private sector. After serving as the U.S. Attorney General in the aftermath of the largest financial scandal in our nation’s history, Eric Holder returned to the private practice and a multi-million dollar salary.
In fairness, it would be inaccurate to single-out Holder as the only former DOJ official to cash-in on his way out. Holder’s former Assistant Attorney General, Lanny Breuer, went to the same firm for reportedly $4 million a year. In fact, there were other members of Holder’s team at the DOJ who returned to Covington & Burling, which happens to be one of the top defense firms for Wall Street’s high-profile clientele.
There are many ways in which the revolving door has corrupted our system. Most notably, there has been a mass exodus from Capitol Hill to K Street. Remarkably, there are now 434 former members of Congress working as professional lobbyists and the conflict of interest is obvious. Congressmen can make much more money on the backend as lobbyists as long as they play ball for the special interest groups while in office.
This type of quid pro quo relationship is quite visible with government regulators as well. There are too many examples to list in an article, but the current opioid crisis may be the most relevant. It’s no secret that various drug manufacturers and distributors played a major role in the current problem. On the other hand, it isn’t widely known that the DEA regulates those drugs and sets the maximum production levels. The DEA continued setting higher production quotas while the crisis escalated. Bear in mind, many of the former DEA officials who were directly involved in these regulations subsequently found lucrative work with the same drug companies.
Then again, Barack Obama was supposed to “fundamentally transform” the way Washington D.C. functioned. In a campaign speech, he promised to “turn the page on policies that put greed and irresponsibility by Wall Street before the hard work and sacrifice of folks on Main Street.” Understandably, it’s much easier to read a speech than to implement actual political reforms at the highest level. However, Obama never acted upon the progressive rhetoric that launched him into office. Thus, he’s now quite welcome on Wall Street. As a matter of fact, it was reported recently that the Obamas are considering purchasing an apartment in Manhattan’s Upper East Side.
Their potential new home is only a ten-minute drive from Wall Street, which would be very convenient for his next paid speaking gig. As a reminder, just three months after leaving office, Obama accepted a $400,000 speaking fee from the investment bank, Cantor Fitzgerald. Sure, he can read a teleprompter with the best of them, but no one can truly justify such speaking fees in the free market, particularly Wall Street firms that are laser-focused on profitability. That is, unless, such fees are actually helpful for a firm’s bottom line. Hence, there’s no other way to look at such exorbitant fees as anything other than part of an unofficial kickback scheme.
Hillary Clinton deservedly took a lot of flak for participating in this corrupt practice, which, in her case, functioned like a preemptive bribe. Conversely, Obama’s $400,000 speaking gig was more like payment for services rendered. By the way, that $400,000 figure is very symbolic because Obama vetoed a bill that would have reduced pensions for former presidents if their incomes surpass $400,000. Even more symbolic, he vetoed that bill on his last possible day in office.
Obviously, these types of speeches involving former presidents or presidential candidates capture much media coverage. However, this paid-speaking racket is also fairly common among our nation’s most prominent former financial regulators. For instance, Ben Bernanke, the past chairman of the Federal Reserve who presided over the banking industry in the wake of the 2008 financial crisis, received $250,000 for a single speech after leaving office. He’s not alone. Virtually, every high-level official from the Federal Reserve or the Treasury Department has participated in this shady practice, including Timothy Geithner, Alan Greenspan, Larry Summers, among many more.
To wrap up, Donald Trump accurately labeled our political system as a “rigged game,” but there may be a bright spot. Trump’s numerous blunders and scandals seem to be providing the public with a valuable education about the flaws of our government. With luck, this newfound attention may force some necessary reforms.
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