Yet another participant in Jamie Dimon’s criminal enterprise goes to prison.
It was not that long ago that a veritable army of trolls would emerge upon our merest mention that precious metal markets (like all other markets) are manipulated, whether by commercial or central banks, or by random assorted hangers on.
Today, we can table that particular debate in perpetuity, after US District Judge Edmond Chang sentenced the former head of JPMorgan’s precious-metals desk and his top trader to prison for spoofing, fraud and market manipulation.
Michael Nowak, whom we first highlighted back in 2019…
… and most recently profiled last year, and who once upon a time was not only an LBMA board member but also ran gold and silver trading at JPMorgan, as well as his top trader Gregg Smith were sentenced Tuesday in Chicago with Nowak receiving a term of one year and one day while Smith was given two years, the stiffest sentence yet in a recent government crackdown on questionable trading practices.
In imposing sentence, the judge said Smith and Nowak clearly knew what they were doing was wrong.
“This is a serious offense that you committed,” Chang said to Nowak. “What happened here was the equivalent of putting out lies – and many lies – into the market. Market integrity is a crucial component to the financial markets. These lies moved the market. It’s not like they had zero impact.“
Smith and Nowak “used their positions as some of the most powerful traders in the worldwide precious metals markets to engage in an egregious effort to manipulate prices for their benefit,” Acting US Assistant Attorney General Nicole M.
Argentieri said in a statement, adding the Justice Department was committed to holding “accountable those who engage in fraud and manipulation that undermines the investing public’s trust in the integrity of our commodities markets.”
As Bloomberg reports, the stiff (for a banker) prison sentences were intended to “send a message” that market manipulation will be punished, the judge said. “I’m trying to deter all forms of financial fraud in the market,” he said, clearly unaware of this thing called the Federal Reserve.
Chang ordered Nowak to start his sentence on Oct. 23 and Smith on Jan. 15. Lawyers for both men said they planned to appeal their convictions.
Prosecutors had initially sought sentences of six years for Smith and five years for Nowak, but on Tuesday said they were revising those down to around two years. Both men’s lawyers argued that they should be spared jail because neither gained personally from the spoofing. Of course, both main made millions in bonuses which would never have been paid had they not generated huge gains for Jamie Dimon’s criminal enterprise.
The JPMorgan case was part of a crackdown by federal prosecutors on illegal spoofing, where traders place bogus orders to move prices up or down and then quickly cancel them before they can be executed. Smith and Nowak used the technique to manipulate gold and silver prices from 2008 to 2016, or the entire duration of the period in which we said – and showed – that gold manipulation was rampant, for which were frequently mocked and ridiculed.
Convictions for Smith, Nowak and a third trader who was found guilty in November, Christopher Jordan, capped a string of wins by prosecutors in spoofing cases targeting some of Wall Street’s biggest banks, including Bank of America, Deutsche Bank AG and Morgan Stanley. Two former Deutsche Bank and two former Bank of America traders previously each received one-year sentences.
JPMorgan, the largest US bank and the biggest US financial criminal enterprise by far, agreed in 2020 to pay $920 million to settle the Justice Department’s allegations against it – the biggest fine by any financial institution accused of market manipulation since the 2008 global financial crisis.
Prosecutors also charged several members of the team Nowak led at JPMorgan. Three of them pleaded guilty and testified against Nowak and Smith. The witnesses described how Nowak and Smith routinely placed huge buy and sell orders they never intended to execute – part of their strategy to push prices in the direction that would profit the bank.
Christiaan Trunz, a former Smith protege and one of the traders who pleaded guilty and cooperated, told jurors that he learned to spoof by watching Nowak and Smith for years. When Trunz came under scrutiny for his own spoof trades, he said Nowak coached him to lie to compliance officials and later counseled him against pleading guilty as prosecutors were preparing criminal charges against top executives on the trading desk.
Trunz testified that Smith was so fast at placing and canceling bogus orders that his colleagues would joke that he needed to put ice on his fingers to cool them down.
“This was an open strategy on the desk,” said Trunz, who sat next to Smith and watched him click his computer mouse rapidly to place and cancel trades. “It wasn’t hidden.”
By Pam Martens and Russ Martens
Remember all of that sensational social media buzz in 2016 about a politically-connected ring of pedophiles operating out of a pizza parlor in Washington, D.C.? The story was debunked by Snopes but not before it had gone viral.
While the pizza parlor was getting plenty of attention, an actual, highly sophisticated, child sex-trafficking ring had been operating with impunity for more than a decade out of the largest bank in the United States, JPMorgan Chase.
Based on astonishing internal documents from JPMorgan Chase obtained during discovery in a federal lawsuit and filed on the court docket last week, it now appears that the U.S. Department of Justice has turned a blind eye toward this bank’s facilitation of Jeffrey Epstein’s sex trafficking crimes for more than 16 years, during the administrations of four separate Presidents of the United States.
The heavy-lifting for what should have been a criminal investigation by the U.S. Department of Justice in this matter is now being conducted by the U.S. Attorney’s Office for the U.S. Virgin Islands in a civil lawsuit, using the law firm, MotleyRice.
A new document filed last week with the federal court in Manhattan that is hearing the case shows that on September 6, 2007, the U.S. Attorney’s Office for the Southern District of Florida (part of the U.S. Department of Justice) followed up on a subpoena it had issued to Bear Stearns, demanding to receive “a list of accounts at other financial institutions that Bear Stearns has either transferred money to or received money from on behalf of Mr. Epstein….”
The peculiar thing about this letter is that a federal law enforcement agency is asking a private bank to help it locate Epstein’s other bank accounts when it has that information easily accessible at two federal databases: the Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve System which handles the wiring of funds between banks and others.
In fact, the U.S. Department of Justice has a Financial Investigations Guide that specifically lists those two sources as key government databases to tap when conducting a financial investigation into money laundering or other criminal financial activity.
One reason that comes to mind as to why a federal prosecutor would ask a private bank like Bear Stearns to provide outside banking relationships for Jeffrey Epstein, instead of getting that information directly from reliable government databases, is that the prosecutor didn’t want to know or was instructed by higher ups to stand down.
This is the same U.S. Attorney’s Office in the Southern District of Florida that had received a deeply investigated case from the Palm Beach County Police Department, documenting that Epstein had sexually assaulted dozens of schoolgirls at his Palm Beach home. Under a secret non-prosecution agreement, this same U.S. Attorney’s Office agreed not to prosecute Epstein or his accomplices for federal crimes. Epstein ended up with a lenient 18-month jail sentence in 2008, which morphed into 13 months, the bulk of which was a work release program where Epstein was driven by his limo driver to an office each day.
Because of that abysmal failure by the U.S. Department of Justice, Epstein was able to continue his sexual assaults of underage girls and arrange for his rich pals to do the same, from his release from jail in Palm Beach County in July of 2009 until the Justice Department was shamed by the Miami Herald’s “Perversion of Justice” newspaper series in November of 2018 into arresting Epstein on federal charges of sex trafficking of minors on July 8, 2019. (Epstein was found dead in his jail cell while awaiting trial a little more than a month later, on August 10, 2019. His death came the day after an appellate court released 2,000 pages of previously sealed documents, including the names of politicians and other powerful men that a victim alleged were part of his sex ring. The New York City Medical Examiner ruled that Epstein’s death was a suicide.)
A federal appellate court that looked at the Justice Department’s handling of the Epstein case and its failure to inform his victims’ about its non-prosecution agreement, called it “a national disgrace.”
Throughout this period, the largest taxpayer-backstopped, federally-insured bank in the United States, with media darling Jamie Dimon sitting at its helm, was somehow able to engage in more than 9,000 money transactions for Epstein, which “had a combined value of over $2.4 billion,” according to court evidence introduced by the U.S. Virgin Islands.
Those transactions included the following amounts of hard cash according to documents obtained by the U.S. Virgin Islands:
“In the year 2003, Epstein was able to withdraw highly suspicious amounts of cash totaling $175,311. In 2004, he withdrew $840,000. In 2005, he withdrew $904,337. In 2006, he withdrew $938,625. In 2007, he withdrew $526,000. In 2008, he withdrew $469,000. In 2009, he withdrew $165,011. In 2010, he withdrew $253,397. In 2011, he withdrew $260,000. In 2012, he withdrew $290,000. In 2013, he withdrew $197,152.”
So let this sink in for a moment. The Justice Department’s U.S. Attorney’s Office in the Southern District of Florida was supposedly on a subpoena hunt in September of 2007 to learn the names of any other banks that might be laundering money for Epstein. But, somehow, despite government databases being readily available to provide the name of his most important bank, JPMorgan Chase, Epstein was able to withdraw millions of dollars in hard cash from that bank, unimpeded for years – when any cash withdrawal of $10,000 or more should have blown the whistle on Epstein and stopped his operation.
During the financial crisis in 2008, JPMorgan Chase bought the collapsing Bear Stearns and, apparently, obtained its records. The U.S. Virgin Islands was able to obtain during discovery the internal emails at JPMorgan Chase, where its anti-money-laundering personnel express curiosity as to why Bear Stearns got a subpoena in the Epstein case but it didn’t, despite being Epstein’s primary bank.
In a January 10, 2011 internal email at JPMorgan Chase, Maryanne Ryan, the Vice President of Anti-Money-Laundering (AML) Operations, emails William Langford, then Global Head of Compliance at the bank according to his LinkedIn profile (and a former executive at FinCEN who should have intimately understood the need to be filing Suspicious Activity Reports for Epstein’s massive cash withdrawals).
Ryan reveals the following: that JPMorgan Chase “never was served a subpoena,” which she admits that she finds “odd, since we were his #1 bank and actually Bear got one in 07.” Ryan also reveals in this email that “Steve Cutler” has approved Epstein to remain as a customer at JPMorgan Chase’s Private Bank. Steve (Stephen) Cutler was the former Director of Enforcement at the Securities and Exchange Commission prior to becoming General Counsel at JPMorgan Chase. According to the transcript of the deposition of Jamie Dimon, the Chairman and CEO of the bank, as part of the U.S. Virgin Islands’ lawsuit, Cutler worked in the office directly next door to Dimon and reported to Dimon.
Dimon also stated in his deposition that he had never heard of Epstein and didn’t know he had accounts at the bank until Epstein’s arrest in 2019. It raises much skepticism on Wall Street that Cutler, who reported to Dimon, would have failed to get permission from Dimon before deciding to keep this Level 3 registered sex offender at the bank and look the other way at hundreds of thousands of dollars in cash withdrawals year after year.
For example, another internal email filed with the court shows that on October 24, 2008 an employee writes that it is his understanding that JPMorgan Chase “requires top of the house ok for clients who are convicted felons.” He cites this chain of approval as follows: “PCS Legal [Private Client Services Legal] to Asset Mgt Legal to Cutler to Jaime Daimnon [Jamie Dimon].”
Other internal documents show that Epstein was catered to at the bank because he referred large accounts from ultra wealthy individuals, notwithstanding the fact that the anti-money-laundering personnel at the bank were regularly circulating media reports about Epstein’s scandalous history.
The head of the U.S. Attorney’s Office for the Southern District of Florida at the time Epstein was let off the hook with the secret federal non-prosecution agreement was Alex Acosta. Donald Trump made Acosta the head of the U.S. Department of Labor – a key federal agency in preventing human trafficking. Acosta resigned in 2019 after news reports focused on the secret non-prosecution agreement Acosta has presided over for Epstein in the Palm Beach County case.
The U.S. Department of Justice has failed to bring charges against JPMorgan Chase despite what appears to be a mountain of evidence that it laundered money for Epstein through four different Presidents and their appointees at the U.S. Department of Justice: George W. Bush, Barack Obama, Donald Trump, and Joe Biden. Clearly, the American people must demand an Independent Special Counsel to investigate why the Justice Department wears a permanent blindfold when it comes to Jamie Dimon’s bank.
In addition to the Epstein matter, the Special Counsel needs to investigate the previous two non-prosecution agreements and three deferred-prosecution agreements that were given to JPMorgan Chase – despite its serial felony charges and a rap sheet that rivals that of an organized crime family.
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