One Up For Occupy Wall St. – Judge Orders Citigroup Cannot Buy It’s Way Out of Charges

In 2008, George Bush issued a DOJ directive that sealed the deal on a practice known as “deferred prosecutions.  The directive gave DOJ and SEC desk jockeys incredible latitude with a practice used for years to craft immunity deals, with big companies, in secret in exchange for millions in fines and promises to be better.

The practice of buying your way out of prosecution (without admitting guilt) was used as early as 2004 when AIG reached a deal of ‘deferred prosecution’ with the Justice Department. Avoiding all criminal prosecution, AIG simply paid a fine of $126 million dollars and the charge of “helping their clients falsify financial statements” just … went away.

Recently, Citigroup made similar offer to the federal government to the tune of $285 million in return for dropping  the charges it defrauded investors. The deal would quietly wrap-up Citi’s case without admitting guilt.  Under the deferred prosecution directive, the deal looked like a gimme.


Federal Judge Jed Rakoff sent a message today to Wall Street, the Securities Exchange Commission and Occupy Wall Street, that may ripple in a shockwaves. Judge Rakoff refused to approve the payout to drop charges against Citigroup.

Putting up a first-of-it’s-kind roadblock in the decades long slide towards rigged backroom settlements, Rakoff noted the proposed deal benefitted Citi and the SEC but not the public interest. 


Goldman Sachs paid a $535 million dollar settlement to the government “without admitting guilt” in a case brought by investors claiming fraud in a similar debt obligation scam.

Prudential, Bristol Myers Squibb got similar deals and in July 2011, JP Morgan Chase walked away with a fine that equaled their profits for one single day.