EDITOR NOTE: Why would President Trump and US AG William Barr replace Geoffrey Berman with Jay Clayton, someone who has absolutely no experience in criminal prosecution? Well, he’s potentially chummy with Wall Street; that much we can assume. But what does that mean, exactly? What’s the Trump-Barr scheme trying to cook up? It might have something to do with JPMorgan Chase (remember the investigation toward its illegal manipulation of the precious markets?) and Goldman Sachs. Here’s one thesis...
Shortly after 9 p.m. last evening, the U.S. Attorney General, William Barr, stunned prosecutors in the Southern District of New York with the announcement that their boss, Geoffrey Berman, was stepping down as U.S. Attorney in that District and would be replaced with the sitting Chairman of the Securities and Exchange Commission, Jay Clayton, who lacks even a shred of criminal prosecution experience. What Clayton does have is a lot of experience representing Wall Street’s largest banks, like Goldman Sachs and JPMorgan Chase, both of whom are currently under intense criminal investigations by the Justice Department. Clayton was a former partner at Wall Street’s go-to law firm, Sullivan & Cromwell, which is currently representing Goldman in the criminal case and representing JPMorgan in various matters.
The breaking news last night went downhill from there. Several hours after Barr’s announcement, Berman announced that he had not resigned from his job and had no intention of leaving his post until his replacement had been confirmed by the U.S. Senate – which could take months. There is also no assurance that Clayton would actually be confirmed, since some Republicans and Democrats believe that Clayton has been a lapdog for Wall Street in his current post.
Even more problematic, Clayton’s family has ties to an opaque company called WMB Holdings, described by David Dayen in The Nation magazine like this:
“This company and its affiliated partners (Delaware Trust Co and CSC) are conduits for creating shell corporations and other sketchy vehicles used in tax evasion and money laundering. Public Citizen found apparent links between these companies and Mossack Fonseca, the notorious Panamanian law firm at the center of the Panama Papers scandal.”
The timing of the attempted ouster of Berman is suspicious on multiple fronts. Goldman Sachs is under criminal investigation over a multi-billion-dollar money laundering and embezzlement scheme involving the Malaysian sovereign wealth fund known as 1MDB. Goldman Sachs has been fighting the Justice Department’s demand that it plead guilty in order to settle the case, according to media reports.
According to the Sullivan & Cromwell website, Nicolas Bourtin, Managing Partner of the law firm’s Criminal Defense and Investigations Group, “is representing Goldman Sachs in criminal and regulatory investigations in six jurisdictions” involving the 1MDB matter.
At the time of Jay Clayton’s nomination for SEC Chair, he had been outside counsel to Goldman Sachs for years and was married to a Vice President at Goldman Sachs, Gretchen Clayton, who had worked at the firm for 17 years. She stepped down from Goldman after her husband was confirmed.
In 2017, when the 1MDB matter began to intensify, Sullivan & Cromwell partner Karen Seymour left the law firm to join Goldman Sachs as co-General Counsel and partner. She is now the sole General Counsel and earned over $8 million last year for work that included “an active focus on the resolution” of the 1MDB matter.
JPMorgan Chase had multiple traders from its precious metals desk indicted by the Justice Department on RICO charges last year for allegedly running a racketeering enterprise out of the precious metals desk at JPMorgan. The firm itself is now under criminal investigation according to a February report at Bloomberg News.
Another felony count at JPMorgan Chase could be the death knell for the career of JPMorgan Chairman and CEO Jamie Dimon. During Dimon’s tenure as CEO, JPMorgan has pleaded guilty to two criminal felony counts in 2014 for its role in handling the business bank account for Ponzi schemer Bernie Madoff. In 2015 the bank pleaded guilty to one felony count for its role in rigging foreign exchange trading. It’s unprecedented for a major Wall Street bank to survive three felony counts. A fourth felony count might be simply too much for even today’s crony regulators.
Mainstream media has made much out of the fact that this U.S. Attorney’s office is actively investigating Trump ally, Rudy Giuliani, and Deutsche Bank, a major financial lender to Trump’s companies. But the fact that Barr, and assumedly Trump, want to replace Berman with Clayton – a man with no criminal prosecution experience but chummy ties to Wall Street – suggests this is really about Goldman Sachs and JPMorgan Chase.
Berman has changed his mind and decided he will step down after all. The change of heart came after Barr issued another letter to Berman on Saturday, June 20. The new letter stated that President Donald Trump was removing Berman from his job. The letter also indicated that Berman’s Deputy U.S. Attorney, Audrey Strauss, would become the Acting U.S. Attorney. Barr’s earlier statement on Friday evening had indicated that Craig Carpenito, the U.S. Attorney for the District of New Jersey, would assume Berman’s post “while the Senate is considering Jay Clayton’s nomination.”
A new embarrassment is emerging for both Jay Clayton and Sullivan & Cromwell. On Saturday, Senate Judiciary Committee Chairman Lindsey Graham, Republican of South Carolina, released a statement indicating that he won’t move forward on Clayton’s nomination without the standard policy of getting a go-ahead from the two Senators of the state where the new U.S. Attorney will serve. That means that Senators Chuck Schumer and Kirsten Gillibrand would have to give the greenlight to Clayton.
Schumer released the following statement:
“Forty seven years ago, Elliott Richardson had the courage to say no to a gross abuse of presidential power. Jay Clayton has a similar choice today: He can allow himself to be used in the brazen Trump-Barr scheme to interfere in investigations by the U.S. Attorney for the Southern District of New York, or he can stand up to this corruption, withdraw his name from consideration, and save his own reputation from overnight ruin.”
According to the New York Times, Senator Gillibrand has also stated that Clayton should withdraw his name from consideration.
Originally posted on Wall Street on Parade