I previously posted about the possibility that the Samourai defendants could attempt a selective prosecution defense. Historically this defense is rarely successful, so the trial attorneys may dismiss it out of hand. There may also be stronger defense strategies that will be revealed after more evidence is disclosed. Whether or not the issue is raised in a courtroom, I do want to at least bring some attention to the overt hypocrisy being demonstrated by the US Attorney’s Office in the Southern District of New York.
Standard Chartered Bank
I think the best way to make my point is to delve into the US Government’s treatment of Standard Chartered Bank, a “too big to fail” London institution. Note that the U.S. proceedings were conducted in The Southern District Of New York, the same venue where the Samourai indictment was brought.
Buzzfeed published an in depth article which revealed the special treatment the bank received from Fincen and the Justice Department despite the many money laundering and sanctions violations investigations:
Below are some passages, but I encourage you to read the whole article.
Taken together, the whistleblowers’ accounts and the banks’ Treasury reports show the depth of the money laundering problems at Standard Chartered and the extent to which the US government gives big banks a pass when they break the rules.
In 2008 New York state prosecutors announced that the bank had helped its clients hide at least 59,000 financial transactions, worth a quarter of a trillion dollars, that potentially violated American sanctions against Iran. The bank had made “hundreds of millions of dollars in fees” off those clients, the prosecutors said.
The bank admitted to having broken the law, but only up until 2007. The New York regulators had threatened to revoke the bank’s business charter. The punishment would effectively halt its access to the US dollar market, a death blow for a global financial institution. But, with a promise from Standard Chartered to stay on the straight and narrow, and an outside monitor keeping a close eye on the bank, prosecutors held off bringing any criminal charges. New York state issued a fine of $340 million — a mere 1.3% of Standard Chartered’s revenue that year. The bank was allowed to continue winding down its business with a number of Iranian clients.
The story doesn’t end there. A whistleblower came forward with evidence that Standard Chartered did not cease its money laundering activities:
Those records, which have since been reviewed by BuzzFeed News, showed that Standard Chartered was working with Iranian clients after 2007. What Knight didn't know was that the government had allowed the bank to fulfill its obligations with some Iranian clients after 2007. Those clients had permission to repay their outstanding loans to the bank in currencies other than US dollars, or to withdraw their existing balances from bank accounts that were otherwise blocked by the US government. This informant began talking with the FBI. In the process, he is outed and his life is threatened. The FBI file is lost. Standard Chartered had friends in high places:
George Osborne, the UK’s chancellor of the exchequer at the time, wrote a letter to the Federal Reserve copying in Timothy Geithner, then the US secretary of the Treasury, to discuss his “concerns.” The US was coming down awfully hard on the bank, Osborne said, hard enough to endanger its health. “For a systemically important financial institution,” he wrote, “this could lead to contagion.” Endanger one bank, he seemed to suggest, and the whole economy could suffer.
The Department of Justice and Standard Chartered ultimately negotiated a deferred prosecution agreement, the US government’s preferred tool for getting wayward banks back on track. Standard Chartered would pay a second fine — $227 million — but so long as the bank kept its nose clean, there would be no criminal prosecution on the federal level, either, and the bank would not lose its license.
This deal was offered, and no criminal prosecution ensued, despite the following:
The investigations found that senior managers in the bank’s Dubai office hadn’t blocked transactions from Iran after staff discovered dozens of clients used the bank’s internet platform known as “Straight-to-Bank” to access US dollar accounts. The bank’s compliance staff, according to the New York prosecutors, had “utterly failed.”
The Samourai Prosecution
Unlike Standard Chartered employees and managers, the Samourai defendants had no knowledge or control over individual transactions, and did not, nor did they have the ability to, falsify any documents. Standard Chartered was involved in active sanctions violations and money laundering activities. The Samourai defendants wrote computer code, which is constitutionally protected speech in the United States. This was established in Bernstein v. U.S. Dept. Of Justice. To read more about this topic, here’s a pretty good article:
https://www.pbs.org/wgbh/nova/article/is-code-free-speech/
Standard Chartered management committed affirmative, criminal acts, and were not prosecuted.