U.S. Attorney General Eric Holder, Jr. (Photo: Diego M. Radzinschi / NLJ)
Attorney General Eric Holder Jr. on Monday defended his record on prosecuting large banks, announcing a $2.5 billion deal with Credit Suisse and foreshadowing additional prosecutions.
Holder said the case against Credit Suisse, which pleaded guilty to a conspiracy charge on Monday, showed “no bank is too big to jail.”
Holder for weeks had vowed new criminal actions against major financial institutions. The dearth of major criminal cases against big banks and Wall Street executives has long been a source of attention—and criticism—for the Justice Department.
Credit Suisse, charged with helping clients avoid paying U.S. taxes, was the largest bank to plead guilty in 20 years, the Justice Department said.
“This case shows that no financial institution, no matter its size or global reach, is above the law,” Holder told reporters Monday evening at a press conference at Main Justice. “We will never hesitate to criminally sanction any company or individual that breaks the law. A company’s profitability or market share can never and will never be used as a shield from prosecution or penalty. And this action should put that misguided notion definitively to rest.”
Prosecutors alleged in the one-count information that Credit Suisse helped American clients conceal assets in secret, offshore accounts to avoid paying taxes to the IRS. Hundreds of Credit Suisse employees, including managers, “wilfully aided and abetted” the conspiracy, according to prosecutors. The scheme, the government alleged, lasted decades.
A team from King & Spalding, including partner Christopher Wray, represented Credit Suisse. Wray was a former assistant attorney general in charge of the DOJ Criminal Division during the George W. Bush administration. Chief Judge Rebecca Beach Smith of U.S. District Court for the Eastern District of Virginia presided over Monday plea hearing.
“We deeply regret the past misconduct that led to this settlement,” Credit Suisse Chief Executive Brady Dougan said in a statement, according to Reuters. Dougan said “we have seen no material impact on our business resulting from the heightened public attention on this issue in the past several weeks.”
Holder said he hoped the Credit Suisse announcement would mark “a firm and unequivocal message to anyone who would engage in dishonest or illegal financial activity that the Justice Department does not, and we will not, tolerate such activities.”
At the press conference, Holder was asked whether the Justice Department treated foreign banks differently than U.S. financial institutions.
“If there are domestic banks that have similar fact situations or other fact situations that we think warrant the bringing of criminal charges we will simply bring them,” Holder said. “No bank is too big to jail. That notion is simply inconsistent with how this department has conducted itself.”
Holder today declined to comment on other ongoing investigations that involve financial institutions. He said DOJ worked closely with regulatory agencies during the investigation of Credit Suisse. “I am confident that this robust cooperation will serve us well in the weeks and months ahead.”
Credit Suisse, Holder said, “will move forward,” notwithstanding potential “serious follow-on actions by regulatory agencies.”
“We are mindful that guilty pleas by a bank can have impacts far beyond the parties to the plea,” Deputy Attorney General James Cole said in a written statement Monday. “This plea demonstrates that the Department of Justice and bank regulators are prepared hold banks and their relevant employees accountable while being mindful of the impacts on depositors and the American public.”
Cole added: “The coordination required for this result can take considerable time, as in this case, but it is work that we deem important.”
In April, Holder defended his Justice Department’s record on the prosecution of banks. “This department’s record under my leadership will I think stand the test of time, I’ll compare it to any other justice department, any other attorney general, at any other time,” Holder testified then.