Legal Commentary

The subprime mortgage criminal lottery

By Tom Kirkendall

Well, well, well. Look who is resurfacing in connection with the creation of the Justice Department's latest criminal Task Force to investigate whether crimes were committed when the subprime-mortgage market collapsed (just what we need -- another corporate crime lottery):

Federal prosecutors are stepping up their scrutiny of players in the subprime-mortgage crisis, with a focus on Wall Street firms and mortgage lenders.

Prosecutors in the Eastern District of New York in Brooklyn have formed a task force of federal, state and local agencies that will involve as many as 15 law-enforcement agents and investigators.

The U.S. attorney for the office, Benton J. Campbell, who supervises about 150 prosecutors, said the group will look into potential crimes ranging from mortgage fraud by brokers to securities fraud, insider trading and accounting fraud.

You may remember Campbell. He was the lead prosecutor on the Enron-related criminal trial known in these parts as the first Enron Broadband trial, which ended in an embarrassing loss for Enron Task Force after the prosecution was caught threatening defense witnesses (see also here) and propounding false testimony from one of its key witnesses during the trial. Sort of what you would expect from a trial in which the Task Force advocated an unwarranted expansion of a criminal law intended to punish kickbacks and bribes against business executives who did no such thing.

Interestingly, in the Wall Street investigation, Campbell thinks there actually may be a non-criminal explanation about the meltdown in the sub-prime market:

Mr. Campbell said the "jury is still out" on just how much criminal activity the office might find, particularly on Wall Street, which saw a sudden decline in the value of securities backed by pools of mortgages last year. "There are market forces in play in that area, and that doesn't necessarily mean there is fraud," said Mr. Campbell, 41 years old.

H'mm. How many damaged lives and careers would have been salvaged had Campbell and his fellow Enron Task Force prosecutors been so open-minded?

Full post as published by Houston's Clear Thinkers on May 06, 2008 (boomark / email).