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Why Bother to Include the Term "Bid Rigging" in a Department of Justice Headline?
Written: December 8, 2010

Lately, I seem fixated on the titles of press releases from the United States Department of Justice.  The other day, I sort of laced into the Justice Department about its “Operation Broken Trust.” See, “Operation Broken Trust – Or Should That Be Broken Truss?“  

Just when I thought that I was out, they pull me back in. 

They Did What Exactly?

Consider this December 7, 2010, headline for a Justice Department press release: 

Bank of America Agrees to Pay $137.3 Million in Restitution to Federal and State Agencies as a Condition of the Justice Department’s Antitrust Corporate Leniency Program  

Ya gotta let the words in that headline just roll around in your brain for a bit – let ‘em rattle around until they come to rest. 

Lemme see if I got the gist of this story:  The too-big-to-fail Bank of America has graciously agreed to pay $137.3 million to some government agencies as restitution, and it’s all part of a “Leniency Program.”  

Just one teensy weensy little problem. What did Bank of America do wrong?

Maybe it’s just me — Mr. Stickler for Details — but when you pay over one-hundred million dollars in restitution, doesn’t that sort of mean that you did something wrong ?  Take another gander at the press release headline: You tell me . . . what did Bank of America do wrong to warrant paying restitution? 

Not that a humongous organization like Bank of America would ever get any consideration from the equally humongous Department of Justice but, hey, maybe we’ve entered into a new age of justice with compassion and a smiley face.  Why, damn, Kumbaya, y’all. 

Old-Fashion Headline Copy

Hey, it’s just a headline, Bill. Where you going with this? 

Fair point.  Maybe I’m making a mountain out of a molehill here but consider this headline for another Justice Department press release issued on the same day:  

Four Detroit-Area Residents Arrested in Connection with $14.5 Million Home Health Care Fraud Scheme (December 7, 2010)

Now, that’s more like the old-fashioned crime fightin’ headlines we all grew up with. 

You got Detroit: a classic. hard-knocks city if ever there was one. 

You got your four Motor City residents, count ‘em, four,  who were arrested. Arrested — now there’s a word we all understand. They put handcuffs on you and then take you down to the courthouse for the mug shot. We don’t have any of that soft-core “restitution” or “leniency” blather in this Detroit crime story.  

Even more to the point, there’s the down and dirty allegation about “Home Health Care Fraud.”

All in all, there is no doubt about what these four Detroit desperados were charged with. It’s all there in the nugget of a headline.  Frankly, that’s not surprising. It’s usually how they do things over at the Justice Department when they go after those they consider the bad guys.

A Foolish Consistency?

All of which bothers me.  I mean, you know, when it comes to making criminal allegations or announcing multi-million dollar restitutions, there has to be some consistency in how the government publishes those things — no? 

Yeah, I hear you, it’s just a lousy headline about Bank of America paying restitution.  However, like I said, read the press release headline and tell me:  What exactly did that institution do wrong? Now, you might say that I’m just picking on the big, old bank and the Justice Department. Heavens forbid  — I don’t ever want to be accused of loading the issue.  As such, here are some other random Department of Justice headlines that I culled from its December 2010 archive

  • Latin Kings Leader Sentenced To 262 Months in Prison for Racketeering Conspiracy (December 1)
  • Former New York City Hospital Purchasing Official Pleads Guilty to Bid Rigging and Fraud Conspiracies (December 2)
  • Former Federal Correctional Officer Pleads Guilty to Civil Rights Violation and Obstruction of Justice (December 3)

I dunno, maybe you just can’t expect the small fry to get the same treatment as the big whales.  There’s street crime and then there is that whole White Collar, corporate crime thing. When it comes to spelling out racketeering, bid-rigging, and obstruction of justice, the Justice Department seems to find plenty of room in its headlines. 

Corporate Leniency Program

After reading the entire Justice Department press release about the Bank of America matter, I learned that the restitution was being paid  because of the bank’s “participation in a conspiracy to rig bids in the municipal bond derivatives market and as a condition of its admission into the Department of Justice’s Antitrust Corporate Leniency Program.”   

Wow, that sounds pretty serious. I’m sort of wondering why that cited misconduct didn’t make its way into the high-profile headline for the press release. Buy, then again, I’m not a federal law enforcement agent and these differences and distinctions among and between the bad guys and the alleged bad guys and whatever else gets factored in is way above my pay grade. Maybe what the Justice Department wants us to understand is that there’s a huge difference between a $14 million fraud and a $137 million restitution.  The former warrants inclusion in a headline; the latter just doesn’t make the cut.

Just the Facts

The actual details of the Bank of America case are fairly short; consider these few relevant paragraphs in the press release: 

Bank of America entered into agreements with the U.S. Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), the Office of the Comptroller of Currency (OCC), and 20 State Attorneys General. The global resolution with these federal and state entities provides for payment of restitution to the IRS and to municipalities harmed by Bank of America’s anticompetitive conduct in the municipal bond derivatives market. In a related matter, Bank of America entered into a written agreement with the Federal Reserve Board to address certain remedial measures. 

According to agreements announced today, Bank of America employees engaged in illegal conduct, including bid rigging and other deceptive practices, in connection with the marketing and sale of tax-exempt municipal bond derivatives contracts. 

Bank of America was the first and only entity to come forward and report its wrongdoing to the Department of Justice before the department opened its investigation into anticompetitive conduct in the municipal bond derivatives industry. The department’s ongoing investigation has resulted in charges against seven executives and one corporate entity and guilty pleas by eight executives for antitrust and related federal crimes. The investigation remains active and ongoing. 

Is it me?  Okay, I know, quite often it is – but, seriously, this time, is it only me who doesn’t quite get it? 

What’s the big deal about the Bank of America having been the first such financial institution to fess up to the Department of Justice?  I’m sure that many murderers and bank robbers come forward and surrender before they are arrested.  Do those folks get off with merely writing out a check?  Keep in mind that the bank’s alleged misconduct is of the magnitude that it is paying $137.3 million in restitution to the IRS and municipalities that were harmed by the bank’s anticompetitive conduct.  Not that you’d know that from the press release headline. 

The press release quotes Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division as explaining that 

The Department of Justice’s Antitrust Corporate Leniency Program is essential to our criminal enforcement of the antitrust laws. . . [the] Bank of America’s disclosure of wrongdoing and cooperation has led to an aggressive, ongoing investigation by the Department of Justice into anticompetitive activity in the municipal bond derivatives industry. The bank’s participation in the leniency program has also resulted in today’s resolution to address the harm caused by its wrongdoing. The Division’s investigation of this matter continues and the prosecution of anticompetitive conduct in the financial markets remains our highest priority. 

As a condition of its admission into the Department of Justice’s Antitrust Corporate Leniency Program, Bank of America was required to be the first entity to self report the anticompetitive conduct, acknowledge its wrongdoing, provide ongoing cooperation in the investigation and make full restitution to the victims of the conspiracy. Bank of America continues to provide significant cooperation to the federal and state enforcement officials in their ongoing parallel investigations in the municipal bond derivatives industry. 

Don’t get me wrong – in theory I get the whole idea about encouraging the race to be the first to sing to the prosecutors.  The problem with theory is that it doesn’t always match up with reality.  If smaller corporations and individual crooks were also greeted with the same milk-and-cookies, that would be fine.  However, these leniency programs have an odd way of seeming to perversely reward big corporations — even if that reward is little more than the convenience of writing out a check and being the subject of a fairly benign headline in a press release.  I fully appreciate that this apparent settlement benefits victims of the underlying misconduct, but I’m hardly convinced that putting more bucks into the spendthrift coffers of government agencies is necessarily the best solution. 

Finally, the Justice Department’s Bank of America press release informs us that as a result of the bank’s voluntary disclosure of its anticompetitive conduct and its ongoing cooperation, the Bank of America will not be presently required to pay any financial penalties.  How generous!  And yet, there’s still more to come.  The press release informs us that following the completion of the promised cooperation and compliance with other aspects of the Leniency Program, the Bank of America and its cooperating employees “will not be prosecuted by the Antitrust Division for the reported conduct.” 

Okay, so what exactly happened here?  If a bank engages in an antitrust violation but telephones the Department of Justice before anyone else, and nobody hears the tree fall, did the tree fall?  


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