NEW YORK – New revelations are emerging that could implicate Loretta Lynch, President Obama’s attorney general nominee, in the world’s largest banking scandal.
As WND reported, Lynch, as the U.S. attorney for the Eastern District of New York, oversaw the investigation in 2012 of drug-related international money laundering allegations against London-based HSBC Holdings LLC.
As a result of HSBC agreeing to a settlement requiring the international bank holding company to pay the U.S. government more than $1.2 billion in fines for money laundering, Lynch’s office agreed in return not to press criminal charges against any bank employee of the U.S.-based HSBC subsidiary.
The federal government’s unwillingness to prosecute HSBC was exposed by a former HSBC vice president and relationship manager in New York, John Cruz, who called the bank a “criminal enterprise.” Cruz was ignored by law enforcement authorities until he brought to WND 1,000 pages of customer account records that document his claims.
HSBC also used its power to temporarily shut down WND.com as the news site was breaking a series of stories on the mega-bank’s money-laundering practices.
In a telephone interview with WND, Cruz said the Obama administration “is continuing to cover up its role in the HSBC money laundering scandal.”
“The U.S. government never responded to the evidence I provided of money-laundering activity that I fully documented with records copied directly from HSBC accounts,” Cruz explained to WND after learning court papers were filed Wednesday objecting to the Justice Department stonewalling a FOIA request for the release of documents that could implicate Lynch in a massive cover-up of Obama administration involvement in international money-laundering of Mexican cartel drug money.
Lynch has never explained why the New York U.S. Attorney’s Office in 2012 chose to ignore the 1,000 pages of customer account records Cruz pulled from the HSBC computer system before he was fired by HSBC senior management uninterested in investigating his claim to have discovered illegal money-laundering activity at the bank.
“The official response of the IRS Whistleblower Office doesn’t say there was no fraud or tax evasion committed by HSBC in the money-laundering case,” Cruz explained. “The IRS simply says, ‘In this case, the information you provided did not result in the collection of any proceeds.'”
Cruz began working at HSBC on Jan. 14, 2008, and was terminated for “poor job performance” on Feb. 17, 2010.
In his position as an account relationship manager, Cruz worked in the HSBC southern New York region, a region that accounts for approximately 50 percent of HSBC’s North American revenue, and was assigned to work with several branch managers to identify accounts where HSBC might introduce additional banking services.
“I have firsthand knowledge and proof of how HSBC transferred billions of dollars through accounts linked to companies that did not exist,” Cruz explained to WND.
“I had poor job performance because the portfolio of HSBC accounts I was given to work ended up being 90 percent fictitious and fraudulent accounts. How could I expand HSBC bank relations with fraudulent accounts that were created to be used for illegal money laundering?”
The HSBC customer account records handed over to WND by Cruz detail how HSBC employees, including senior management, have perpetrated a massive and continuing international money-laundering scheme involving thousands of accounts and billions of dollars.
“In the year I worked with HSBC, I came to understand how the money-laundering was facilitated not just by branch managers, but also by senior officers of the bank within the United States and internationally,” Cruz said. “From what I saw, I came to suspect HSBC had become the Mexican drug cartels’ bank of choice.
To implement the money-laundering scheme, the 1,000 pages of customer account records suggest HSBC relies on identity theft to capture legitimate Social Security numbers used to create the bogus retail and commercial bank accounts through which HSBC employees are depositing and withdrawing hundreds of millions of dollars on a daily basis, apparently without the knowledge of the identity-theft victims.
“I’ve never heard back from the two Department of Homeland Securities investigators that did the telephone interviews with me on Feb. 7, 2012, even though both said they would ‘get back to me,'” Cruz said.
“The New York District Attorney that I originally approached has never followed up with me, even after admitting, ‘This is money laundering,'” Cruz continued, after providing WND with documentation showing he had contacted Assistant District Attorney Jeremy Schelleppe and Investigator Patrick Mulcahey of the Suffolk County District Attorney’s office in 2012.
“The HSBC fraud investigator at the bank told me the bank had $2 billion set aside to pay the fines, and conveniently HSBC got away with paying something like $1.9 billion in total fines and penalties,” he said.
Cruz ultimately was fired after his supervisors made numerous attempts to discourage him from pursuing what turned out to be his personal investigation into HSBC illegal money-laundering activity.
“When I began bringing to the attention of my supervisors suspicious activity in accounts that needed to be reported to legal authorities, including the U.S. Department of Homeland Security, I was told to shut up,” Cruz said.
His job required Cruz to access the HSBC computer system to find accounts to contact and visit in person.
“I was shocked to find accounts through which millions of dollars were being deposited and withdrawn without any apparent business activity being conducted,” he said. “Then when I went to visit the business, I found nothing – shell companies, vacant offices with no furniture, or no such business whatsoever at the address listed on the account records.”
Cruz never imagined that holding his job at HSBC would mean turning a blind eye to criminal behavior.
“I always thought that if you ran a bank, you would keep away from customers with fake names,” he continued. “Instead, what I found at HSBC were thousands of accounts established for phantom businesses that had apparently only thousands of dollars of claimed business each year, but millions of dollars flowing into and out of the accounts every month.”
When Cruz attempted to hand his information over to Sen. Carl Levin, D-Mich., then the chairman of the Senate Permanent Investigating Committee looking into HSBC money-laundering activities, he was told to fill out a form, which he did, only to receive no response whatsoever.
“WND is the first and only news agency to put my story on the air, to put my story on the Web, to get my story out to people,” Cruz explained, after providing WND with the letters he had sent to the Wall Street Journal in 2012. Cruz tried to provide the newspaper with the HSBC bank account internal records he had in his possession that documented his allegations HSBC management and senior employees in New York and Long Island were involved in a massive money-laundering scheme.
A close reading of the 330-page report Levin’s Permanent Subcommittee on Investigations issued on July 17, 2012, titled “U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History,” places the blame not on HSBC employees in New York, but upon the bank holding company’s carelessness with acquiring suspect subsidiary banks in Mexico and allowing the Mexican subsidiary to deal with suspect accounts that had alleged ties to Mexican drug cartels.
On page 3 of that report, the Senate Permanent Subcommittee on Investigations attributed the HSBC money-laundering criminal activities to a “weak AML [Anti-Money Laundering] program,” carefully avoiding any allegations that specific HSBC employees in the U.S. or Mexico were criminally liable for their involvement in what the federal government documented was hundreds of billions of dollars in Mexican drug-cartel money tracing back to the year 2000.