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Well well, what do we have here.

America needs more judges like James Fensom. Yesterday, the Panama City (Florida) adjudicator threw out felony drug charges against alleged pot dealer Jeffery Gage after depositions revealed that the police officers who arrested Gage had broken the law in order to make their case.

In his ruling (which you can read in full below), Fensom called the actions of the Bay County Sheriffs Office "outrageous...shocking, [and] disturbing," and declared that they "simply cannot stand."

From the record the cops not only illegally attached a tracking device to the suspect's car without a warrant but then twice trespassed to change the batteries in it, and worse, lied about it under oath while giving depositions to the defense and intentionally withheld the information from the defense.

That's illegal.  The premise of a public and fair trial requires that you be able to face your accuser, and that inherently includes having full access when defending yourself to the evidence against you.  When law enforcement intentionally destroys data that would tend to incriminate their own behavior and then conceals that fact your rights have been violated.

Why did they withhold the evidence?  That's easy -- it clearly demonstrated their illegal conduct and would have led to the exclusion of the evidence and search, without which the case collapses.

It's nice to see a judge that is willing to hold the cops to the letter of The Constitution.

The lesson?  Do not cooperate with law enforcement -- they will and do lie whenever it suits them right up until a Judge tosses their case.  

There's no reason to cooperate with or assist those who will intentionally violate your right to due process of law.

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Oh, so the banks don't just bilk investors and rip off municipalities, they also help Mexican Gangs run drugs?

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.

That's nice.  Guns and ammunition cost money - lots of it.  Getting that money requires some means of transporting it and "laundering" it.  For that, we turn to the largest financial institutions in the world, who, it turns out, have never been prosecuted for these felonious acts.

Wachovias blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations, says Jeffrey Sloman, the federal prosecutor who handled the case.

Blatant disregard?  Sounds like something you'd say at a sentencing hearing, right?  Well, no....

No big U.S. bank -- Wells Fargo included -- has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.

No Capacity to Regulate

Large banks are protected from indictments by a variant of the too-big-to-fail theory.

Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.

The theory is like a get-out-of-jail-free card for big banks, Blum says.

Theres no capacity to regulate or punish them because theyre too big to be threatened with failure, Blum says. They seem to be willing to do anything that improves their bottom line, until theyre caught.

Indeed.

Facilitating drug-running is just one small part of it.  There's also ripping off municipal governments, such as the Jefferson County sewer deal in Alabama.  There's bid-rigging in the GIC market.  And, of course, there's laundering money for violent Mexican drug cartels, who used that money to buy automatic weapons (no, not from America - from China, Venezuela and even from corrupt Mexican law enforcement officials!) with which they then shoot civilians and government officials who refuse to be corrupted.

Oh, and it's not just Wachovia accused in this story.  It's also Western Union and Bank of America.

Workers in more than 20 Western Union offices allowed the customers to use multiple names, pass fictitious identifications and smudge their fingerprints on documents, investigators say in court records.

In all the time we did undercover operations, we never once had a bribe turned down, says Holmes, citing court affidavits.

Very impressive.

To make their criminal enterprises work, the drug cartels of Mexico need to move billions of dollars across borders. Thats how they finance the purchase of drugs, planes, weapons and safe houses, Senator Gonzalez says.

They are multinational businesses, after all, says Gonzalez, as he slowly loads his revolver at his desk in his Mexico City office. And they cannot work without a bank.

Yep.

And we have a banking system that, in the United States, has insulated itself from having to obey the law or be prosecuted for violating the law by threatening the government.

Henry Paulson and Ben Bernanke in 2008, remember?  "Tanks in the streets, martial law"?

Dateline September 21, 2008

Gee, it's not enough to steal from ordinary Americans, it's not enough to rip off state and city governments, it's not enough to rig bids in the municipal bond markets, we must sit still while these institutions literally make possible funding criminal gangs that are committing murder.

There's a name for this folks.

Formally this sort of thing is supposed to be called "Operating A Continuing Criminal Enterprise", or "OCCE":

The FBI defines a criminal enterprise as a group of individuals with an identified hierarchy, or comparable structure, engaged in significant criminal activity. These organizations often engage in multiple criminal activities and have extensive supporting networks. The terms Organized Crime and Criminal Enterprise are similar and often used synonymously. However, various federal criminal statutes specifically define the elements of an enterprise that need to be proven in order to convict individuals or groups of individuals under those statutes.

The Racketeer Influenced and Corrupt Organizations (RICO) statute, or Title 18 of the United States Code, Section 1961(4), defines an enterprise as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity."

The Continuing Criminal Enterprise statute, or Title 21 of the United States Code, Section 848(c)(2), defines a criminal enterprise as any group of six or more people, where one of the six occupies a position of organizer, a supervisory position, or any other position of management with respect to the other five, and which generates substantial income or resources, and is engaged in a continuing series of violations of subchapters I and II of Chapter 13 of Title 21 of the United States Code.

WHERE ARE THE ******N COPS AND WHY DO WE AS AMERICANS SIT STILL FOR THIS CRAP?

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Yeah, ok, the title is dramatic and will never happen.

Nonetheless, if we were truly a nation of laws, it would happen.

The LA Times notes regarding IndyMac depositors over the insurance limit:

The head of the Federal Deposit Insurance Corp. delivered some bad news personally to uninsured depositors who lost money last year when IndyMac Bank crashed and burned, saying an act of Congress is their only hope for recovering their funds.

When a bank fails, we have to do whats least-cost to our deposit insurance fund, FDIC Chairman Sheila Bair said during a public appearance Wednesday in Los Angeles.

Sheila is correct as far as she goes, but like most government employees, it is what she didn't say that is the problem, not what she did.

The problem lies with the willful and intentional refusal to enforce black-letter law, in this case Title 12, Chapter 16, Section 1831o which says in part:

Each appropriate Federal banking agency and the Corporation (acting in the Corporations capacity as the insurer of depository institutions under this chapter) shall carry out the purpose of this section by taking prompt corrective action to resolve the problems of insured depository institutions.

"Shall" is a specific term of art in legislation.  It allows no discretion and mandates action.  "May" and "Can" are two other words of course, and mean what they say - as does "shall."

This section of the law goes on to define capitalization "buckets", each of which represents a level above water, or above zero, of the excess of assets .vs. liabilities for depository institutions.

It also contains plenty of other "shall" directives such as:

Each appropriate Federal banking agency shall
(A) closely monitor the condition of any undercapitalized insured depository institution;
(B) closely monitor compliance with capital restoration plans, restrictions, and requirements imposed under this section; and
(C) periodically review the plan, restrictions, and requirements applicable to any undercapitalized insured depository institution to determine whether the plan, restrictions, and requirements are achieving the purpose of this section.

and plenty more.

Everyone should go read that section of law, and note all the shall requirements in there. 

These are not suggestions, they are mandates, and if they were followed each and every bank that has been closed by the FDIC would have resulted in ZERO loss to uninsured depositors.

The reason for this is simple, when you get down to it - a bank's "capital structure" looks like this (roughly) in terms of claims against a failed institution:

  1. Advances and loans/liens by the government (e.g. employment taxes and liabilities)
  2. Deposit liabilities
  3. Senior secured debt (bondholders)
  4. Senior unsecured debt (bondholders)
  5. Ordinary debt (bondholders)
  6. Preferred stockholders (hybrid stock/bondholders)
  7. Common stockholders
  8. Excess capital (retained earnings, etc.)

As you can see in a liquidation depositors are subordinate only to statutory preference for employment and similar related claims; the entire capital structure of the firm has to be wiped out before depositors take any loss whatsoever.

If assets are properly valued at all times by government examiners and the bank is closed in accordance with the black-letter requirements of Prompt Corrective Action, then in a liquidation the depositors will never lose any money and neither will the FDIC's Deposit Insurance Fund.

It is in fact willful and intentional blindness by government agencies, including but not limited to allowing financial institutions to lie about the value of their assets, that has resulted in these losses being sustained by ordinary Americans.

Sheila Bair and the rest of the government's "apparatus", including the OTS and OCC, will undoubtedly claim "sovereign immunity" from suit, even though in the instant case, that of IndyMac, the OTS' own inspector general has disclosed that an OTS employee and persons at IndyMac conspired together to back-date deposits, thereby distorting the bank's financial condition, and there is now a 100-bank set of history on FDIC seizures that shows the FDIC has not been and still is not following the black letter requirements of Prompt Corrective Action.

We the people must not accept this sort of malfeasance and misfeasance.  These losses sustained by ordinary Americans are not the result of bad luck or even bad decisions by the banks that have failed.  

Instead, these losses taken by ordinary Americans occurred as a direct result of malfeasance and misfeasance by the OTS, OCC and FDIC itself.

To be blunt, if you lost money as a consequence of being an uninsured depositor at IndyMac that loss occurred as a direct consequence of the willful blindness (or worse) of government agencies who have intentionally and wantonly refused to obey the mandates set before them under black-letter law.

You were, in essence, robbed by the government.

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