New headache for Loretta Lynch's nomination

NEW YORK – More bad news for the Loretta Lynch attorney-general nomination has developed since French state financial prosecutors joined the Swiss government in pursuing criminal charges against the Swiss private bank division of HSBC, which is suspected of a tax-dodging scheme to benefit wealthy international customers.

Last month, WND was the first to report the Lynch nomination stalled after Sen. David Vitter, R-La., a member of the Senate Judiciary Committee, announced he was opening an investigation into Lynch’s role in allowing HSBC to avoid criminal prosecution.

HSBC in France has one month to respond before French magistrates make a final decision on whether to proceed to trial, the Guardian newspaper of London reported Friday.

Le Monde in Paris reported HSBC already has refused a plea-bargaining deal to criminal charges of “aggravated money-laundering and tax evasion” being pressed on HSBC by the French financial criminal prosecutors.

The Guardian reported Feb. 18 that 10 days after revelations broke about the HSBC Swiss Bank international scheme, criminal investigations against the bank began in 10 nations around the world.

Among the 10 nations, the Guardian reported in a separate article authored by Paul Lewis in New York, is the United States, with the Department of Justice announcing U.S. prosecutors are seeking to file criminal tax-evasion charges against HSBC and HSBC’s U.S. private banking clients in Switzerland, despite the agreement Lynch negotiated with HSBC two years ago that deferred criminal prosecution.

Read the backstory inside the HSBC scandal – how WND first exposed the massive money-laundering scheme and the fallout from the discovery.

HSBC instead paid $1.9 billion in fines in exchange for admission of willful criminal activity in the U.S. laundering money for Mexican drug cartels and international terrorist groups.

“In her first remarks since the Guardian and other media obtained a huge cache of leaked data from HSBC Switzerland, Lynch said the Department of Justice would not be constrained from bringing tax evasion charges against the bank if there were sufficient evidence,” Lewis reported.

“The leaked files from HSBC’s Swiss subsidiary show how the bank colluded with some clients to conceal billions of assets from domestic tax authorities across the world,” the Guardian article continued. “Lynch, who has yet to be confirmed by the Senate, is under pressure to explain what action the Department of Justice has taken since obtaining the data leak five years ago.”

HSBC was founded in 1865 as the Hong Kong and Shanghai Banking Corporation in the then-British colony of Hong Kong and, a month later, in Shanghai, as trade began in China, including the lucrative opium trade.

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Lynch oversaw deferred prosecution

Vitter decided to open the investigation after his staff quizzed John Cruz, a former HSBC employee-turned-whistleblower whose trove of original evidence of money laundering was reported first by WND.

The meeting left Vitter’s staff asking: “How can we allow Loretta Lynch to be the nation’s top federal law enforcement officer when the HSBC money-laundering scandal raises questions about the propriety of the agreement she engineered?"

At the conclusion of the meeting, the senator decided to open a formal investigation into Cruz’s allegations against HSBC.

Vitter’s staff explained that at the center of the investigation would be the role of Lynch, acting in her capacity as then U.S. attorney for the Eastern District of New York, in the government settlement in 2012 that allowed HSBC senior management to avoid criminal prosecution.

A Department of Justice press release Dec. 11, 2012, named Lynch as representing the Justice Department in the civil settlement in which HSBC agreed to pay $1.256 billion in exchange for a Department of Justice agreement to defer criminal prosecution against HSBC officers or employees, plus $665 million in civil penalties.

The settlement for only a fine followed investigations by the DOJ along with criminal investigators from the U.S. Immigration and Customs Enforcement, the Department of Homeland Security, the New York County District Attorney’s Office and the U.S. Treasury proving HSBC had violated numerous anti-money laundering laws in its processing of billions of dollars of transactions for Mexican drug cartels and Middle East terrorist organizations.

As a condition of the settlement negotiated by Lynch, all HSBC bank employees admittedly involved in the willful criminal scheme were absolved from criminal prosecution.

“I was told in 2009 that HSBC had reserved $2 billion to pay government fines as a cost of doing business to avoid criminal prosecutions in the money-laundering case,” Cruz told WND.

“It’s a travesty of justice that no one at HSBC got prosecuted when HSBC laundered billions of dollars of drug for Mexican drug cartels and laundered billions more for Middle Eastern terrorists in a massive bank fraud scheme. I can prove HSBC bank officials knew was going on from the highest executives in the bank to branch managers and employees throughout the HSBC bank”

'A criminal organization'

Cruz began working at HSBC on Jan. 14, 2008, as a commercial bank vice president and a senior account relationship manager. He was terminated for “poor job performance” on Feb. 17, 2010, after he refused to stop investigating the HSBC criminal money-laundering scheme from within the bank.

Cruz worked in the HSBC southern New York region, which accounts for approximately 50 percent of HSBC’s North American revenue. He was assigned to work with several branch managers to identify accounts to which HSBC might introduce additional banking services.

Cruz told WND he made audio recordings of hundreds of hours of meetings he conducted with HSBC management and bank security personnel, documenting, he charged, bank managers engaging in criminal acts.

“I have hours of hours of recordings, ranging from bank tellers, to business representatives, to branch managers, to executives,” he said. “The whole system is designed to be a culture of fraud to make it look like it’s a legal system. But it’s not.”

Cruz explained that after many repeated efforts, he gave up on the idea that HSBC senior management or bank security would pursue his allegations to investigate and stop the wrongdoing.

“My conclusion was that HSBC was going to do anything about this account, because HSBC management from the branch level, to senior bank security, to executive senior management was involved in the illegal activity I found,” he said.

Despite repeated attempts to bring the information to the attention of law enforcement officers, Cruz hit a brick wall until WND examined his documentation and determined his allegations were sufficiently substantiated to merit publication.

“HSBC is a criminal organization,” he stressed. “It is a culture of crime.”

In 2011, Cruz published a book about his experience with HSBC titled "World Banking World Fraud: Using Your Identity."

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