Securities Lawyer, and former employee of JP Morgan Chase, Alayne Fleischmann, recently spoke out about her experience with the bank, in an interview with Rolling Stone, and revealed the government’s involvement with the “biggest cases of white-collar crime in American history.”
Fleischmann began working for JP Morgan Chase as a deal manager in 2006. She first noticed problems when a new “manager for diligence” was hired to review loans, and he insisted that the employees stop sending him emails. Fleischmann noted that he was “wary of putting anything in writing when it came to its mortgage deals.”
“The whole point of having a compliance and diligence group is to have policies that are set out clearly in writing,” said Fleischmann. “So to have exactly the opposite of that – that was very worrisome.”
The errors continued, and Fleischmann told Rolling Stone that when she raised concerns about “toxic loans,” she found the number crunchers who had also been complaining about the loans “suddenly began changing their reports.”
Fleischmann explained the changes by saying that the head diligence manager started “yelling at his team, berating them, making them do reports over and over, keeping them late at night,” in the same way an interrogator “verbally abuses the target until he starts producing the desired answers.”
“Everything that I thought was bad at the time turned out to be a million times worse,” Fleischmann said.
In 2007, Fleischmann sent a letter to William Buell, a managing director at JP Morgan Chase. According to Rolling Stone, Fleischmann’s letter “warned Buell of the consequences of reselling bad loans as securities and gave detailed descriptions of breakdowns in Chase’s diligence process.”
“It used to be if you wrote a memo, they had to stop, because now there’s proof that they knew what they were doing,” said Fleischmann. “But when the Justice Department doesn’t do anything, that stops being a deterrent. I just didn’t know that at the time.“
Fleischmann was terminated from the company in the midst of a round of lay-offs in 2008. An investigator from the U.S. Securities and Exchange Commission contacted her in 2012, regarding her knowledge of the events that occurred during her time at JP Morgan Chase. While the investigators were interested in certain parts of her story, it was not until 2013 that she was able to relay her full knowledge. This included “the edict against e-mails, the sabotaging of the diligence process, the bullying, the written warnings that were ignored, all of it.”
However, rather than taking JP Morgan Chase to court, Rolling Stone noted that the government “decided to help Chase bury the evidence,” which began when a press conference to announce the civil-fraud charges against the bank, scheduled by Attorney General Eric Holder for September 24, 2013, was “suddenly canceled, and no complaint was filed.”
“Every time I had a chance to talk, something always got in the way,” said Fleischmann. She explained that while it originally seemed like the U.S. government was interested in her testimony, and in brining justice to the crimes committed by JP Morgan Chase, she learned that it was the opposite.
The Justice Department’s political wing, led by Eric Holder, “appeared to be using her, and her evidence, as a bargaining chip to extract more hush money” from JP Morgan Chase CEO Jamie Dimon. The Department succeeded in doing this, and they were paid $9 billion by Dimon in a settlement that released JP Morgan Chase from civil liability.
Fleischman admitted that telling her story, and taking both JP Morgan Chase and the Justice Department to task could have serious ramifications.
“I could be sued into bankruptcy. I could lose my license to practice law. I could lose everything,” said Fleischmann. “But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”